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UFXBank Forex News: Euro Rises Despite Greek Credit Rating Cut

Written by article default Tuesday, 14 June 2011 08:44

USD Dollar (USD) – The dollar dropped in forex trading against most of the major currencies as stocks advanced, spurring investor demand for higher-yielding assets. In addition, Government debt rose earlier today after Federal Reserve Bank of Richmond President, Lacker, said that he has thought about lowering his forecast for U.S. growth. On the same tone, a report today is expected to show that U.S. retail sales declined by 0.50% in May. The Stock Markets rose today, rebounding from an almost three-month low as the Dow Jones rose by 0.01% and the NASDAQ gained 0.1%. Crude oil fell to a four-week low, dropping by 2.4%, and closed at $96.80 a barrel. Oil fell as fuel demand from China slowed and Standard & Poor’s cut Greece’s credit rating to the lowest level held by a country. China is the world’s second- largest oil consumer after the United States. Gold (XAU) dropped by 0.80% to a three-week low and closed at $1,517 an ounce. One of the causes for this was the selling off by some investors to cover losses in equity markets. The fact that everything continues to point to a slowdown is negative for commodities. Today, Core Retail Sales are expected to grow by 0.30% vs. 0.60% previously, the PPI m/m is expected to rise by 0.10% vs. 0.80% previously, and Retail Sales are expected to decline by -0.30% vs. 0.50% previously.

Euro (EUR) – The euro strengthened against the U.S Dollar due to high concern regarding a forecast for poor US economic data today. The euro rose despite S&P’s cutting of Greece’s credit rating  by three levels to CCC yesterday. Trading above the support level of 1.4380 will keep the momentum positive for the pair but if the pair breaks below this support level, it might try again to reach 1.4320. Overall, EUR/USD traded with a low of 1.4319 and with a high of 1.4694. Today, no economic data is expected.

EUR/USD – Last: 1.4420

British Pound (GBP) – The Pound strengthened for the first time in two weeks against the Greenback after the central bank said, in its Quarterly Bulletin published today, that U.K. inflation is “reasonably well anchored”. The trend for the pair is bullish if the pair maintains its support level of 1.6320. Overall, GBP/USD traded with a low of 1.6212 and with a high of 1.6465. Today, the CPI y/y is expected to grow by 4.5%, as it had previously, and the RPI y/y is expected to rise by 5.30% vs. 5.20 previously.

GBP/USD - Last: 1.6410

Japanese Yen (JPY) – The dollar declined against the yen due to expectations that the Bank of Japan policymakers meeting today may decide to expand asset purchases. If the pair succeeds in breaking its support of 80.00, it may bring the pair to 79.60 - its next support level. Today, the central bank is expected to keep the benchmark interest rate at zero to 0.1 percent.

USD/JPY-Last: 80.20

Canadian dollar (CAD) – The Canadian Dollar trade unchanged against its U.S. counterpart, as a drop in oil and an unexpected decline in the nation’s jobless rate balanced out investor sentiment. Canada’s jobless rate unexpectedly fell to 7.40% from 7.60% in May to the lowest level since January 2009. Today, the Capacity Utilization Rate is expected to grow by 77.00% vs. 76.40% previously.

USD/CAD - Last: 0.9740