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The euro rose sharply against the yen and dollar in Asia Monday.
Written by article default Monday, 10 May 2010 18:46
Market OverviewThe euro rose sharply against the yen and dollar in Asia Monday as a series of remarks from the European Central Bank strengthened views that the authorities have created necessary safe-net measures and prompted non-Japanese hedge funds to buy the euro.
Non-Japanese hedge funds and Asian speculators bought the euro as the authorities' quick move to stave off concerns about Greek debt issues reassured investors, dealers said.
Overnight E.U. finance ministers reached agreement on a support plan for nations facing financial meltdown. It will consist of up to EUR440 billion in loans from euro zone governments and EUR60 billion from an E.U. emergency fund, in addition to EUR250 billion from the International Monetary Fund.
The euro also gained after news about the Federal Reserve's reopening of a dollar-swap agreement with other central banks, raising expectations that any critical bankruptcies may be curbed down the road, dealers said.
The euro is higher against sterling, which is steady against other majors pending more news on the U.K/ political front. However, GBP is to trade with risks skewed higher after rebounding strongly from a 1-year low of USD1.4475 Friday as markets await the 1100 GMT BOE monetary policy announcement. The central bank expected to stand pat on its loose policy stance.
The Australian Dollar crashed with Oil falling through 0.9000 to test 0.8700 at the height of the panic. The market was able to recover well however and the pair found support into the US close. March Retail Sales were weaker than expected at 0.3% vs. 0.8% previously.
Market expectation
Looking ahead, the Bank of England's May rate announcement is due 1100 GMT. The unusual timing of this meeting reflects the staging of the U.K. general election, and also dictates that any monetary policy move is highly unlikely at this stage, said economists.
The European single unit won't likely rise above JPY121.00 and USD1.3000 in the near-term, dealers said, as the EU's efforts may not solve deep-rooted problems in fiscally troubled Greece.
European stock markets are expected to open modestly higher Monday on news of a EUR500 billion European Union package to stabilize the euro and prevent the Greek debt crisis from affecting other member countries.
AUDUSD rallies back to highs not seen since Thursday on back of ECB bailout plans for Greece; one senior Sydney-based trader warns uptick may be running out of steam. It may be onwards and upwards in the short term as what was weighing on markets, the ECB indecisiveness appears done. But there are some real factors to weigh on the Aussie right now, say traders.