| ifcmarkets Intraday snapshot |
Thursday's three-week low at 1.4073 low is expected to face renewed bear pressure, as the dominant bear threat has not gone away. A fresh wave of EUR bear pressure is required to force a break below 1.4073, creating scope for a downtrend extension towards 1.4055 and the May 23 reaction low at 1.3968. Thursday's bull hammer candle provides caution, and keeping the 1.4073 low intact would prompt a recovery back to 1.4224, creating scope for a corrective recovery towards 1.4350. |
| Thursday's low at 1.6079 is in line for a retest, as across-board GBP weakness dominates. A push below 1.6079 would leave the May 24 reaction low at 1.6057 vulnerable, and create room for 1.5990 and the Mar. 28 reaction low at 1.5937. A 1.618 Fibonacci extension target lies at 1.5908. Corrective gains are limited to the 1.6271 area, which is protected by 1.6169. |
| Pressure is building on projected support at 80.47, and a push lower would expose 80.34. Loss of 80.47 would also leave Wednesday's high at 81.08 as a potential near-term bull failure, which in turn would bring the 80.09 higher low back into the picture. A recovery above 80.94 is required to re-open the 81.08 high, and keep the uptrend on course for 81.42 and 81.77. |
| The AUD bear trend remains intact, and poised to extend below Thursday's 1.0478 low. Challenging the May 25 reaction low at 1.0441 is the main objective, and there is scope for weakness below 1.0441 to the 1.0304/1.0327 support cluster. A recovery above 1.0578 is required to provide respite, but only a sustained break above 1.0615 would question the bearish AUD outlook. |
| Buying time for Greece will not save the euro. It might stop the single currency from collapsing just now, but it won't prevent a slow erosion of the support that is still holding the euro up now. As another hectic week of negotiations of how to stop Greece defaulting comes to an end, the International Monetary Fund has stepped up to the plate, eased its rules about future funding and is set to release another EUR12 billion to keep Greece going for now. Seeing that the IMF doesn't have a political constituency to please, the international body was the most likely to cave in. Germany also appears to have stepped back from the brink with a summit meeting between German Chancellor Angela Merkel and French Prime Minister Nicolas Sarkozy in Berlin Friday ending with hints that Merkel isn't pushing quite so hard for private bondholders involvement in a bailout. Restructuring their holdings would bring the threat of a default--technical or not--that much closer. These developments have helped to release immediate tensions with euro-zone officials now able to resume their discussions on Sunday, happy in the knowledge that any longer-lasting solution won't have to be resolved until the next deadline in July. Interestingly, this has hardly provided the euro with much of a lift. In fact, investors in the single currency are still burdened with a catalogue of reasons why buying the euro at this stage is hardly a good idea. First off, there is the political risk in Greece. Prime Minister Papandreou may have now reshuffled his cabinet in preparation for a vote of confidence in parliament next Tuesday. But, even if he wins this vote, there remains little reassurance that the Greeks themselves will adopt the austerity measures that are required to keep the country's debt negotiations on track. |
| In European trading hours the euro found some support on unconfirmed Greek reports of an imminent deal as Merkel and Sarkozy restated their commitment to the common currency, to Greece, and to the embattled Papandreou. The eurocrats may deliver something after all-it's clear the French and Germans are at least on the same track. But there's still no deal on the table. The Australian dollar picked up in line with the euro, indicating that Merkel and Sarkozy helped sentiment. Liquidity is thin and markets are jumpy. |
| The euro remained weak against major currencies in Asia Friday as persistent worries about Greece's sovereign debt crisis and concerns over a potential global slowdown made traders shy away from the risk-sensitive single currency. Market watchers were unimpressed with comments from European Union Economic Commissioner Olli Rehn on Thursday that a decision on a second bailout for Greece was expected to be delayed until mid-July. Hideki Hayashi, global economist at Mizuho Securites, said "playing for time is not favourable when market concerns are intensifying". "This could lead to selling of the euro," he added. Meanwhile, Dai Sato, senior vice president of the foreign exchange division at Mizuho Corporate Bank said "The situation in Greece is unlikely to suddenly turn for the better or worse". |
| Fears of a Greek default swelled Thursday, sending the euro in New York trading to a record low against the Swiss franc, as Greece moved closer to political chaos and European leaders moved no closer to a long-term debt solution. Over the last six weeks, the euro has shed 8 cents against the dollar, amid frustration with euro-zone leaders' inability to forge a consensus on a long-term debt plan for Greece. Bickering between Germany and the European Central Bank about the need for a Greek debt restructuring has left many market observers dismayed. Analysts say European Union leaders are accomplishing little beyond prolonging uncertainty--which is roiling markets worldwide--and attempting to buy time that investors appear increasingly unwilling to give. "Greece itself is not the issue, it's more will the EU political leadership be able to come together and effect some sort of solution," said David Watt, senior currency strategist in Toronto at RBC Capital Markets. Adding to the turmoil, Greek Prime Minister George Papandreou struggled to build support for unpopular reforms being demanded by the EU and the International Monetary Fund. He is facing massive protests in the streets and a possible ouster attempt from within his own party. The austerity measures are required to secure a badly needed tranche of funds to help Greece stay afloat. |
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