Eur/usd - page 125
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Yesterday ECB President Draghi said that ECB officials are unanimous to act further if need be and that ECB policy is to remain accommodative for extend period. While the ECB did not alter its policy, the message was dovish, with a wide open door to QE.
EURUSD is staying in range below 1.3717 and above 1.3525. On the downside, break of 1.3576 will turn bias back to the downside for 1.3525. Meanwhile, above 1.3717 will bring another rally.
Euro Snaps Three-Day Gain on Portugal Bank Stress
The euro snapped a three-day climb versus the dollar as a Portuguese bank’s missed debt payments raised concern the region’s financial stability remains vulnerable as it emerges from the sovereign-debt crisis.
Japan’s currency advanced against all of its 16 major counterparts on investors’ demand for safer assets, and after the Federal Reserve’s minutes yesterday boosted speculation that U.S. interest rates will remain near zero this year. Australia’s dollar retreated from the highest in a week after the nation’s jobless rate climbed and imports by China grew slower than economists forecast. Sweden’s krona rose as consumer prices increased. Stocks fell and U.S. Treasuries gained.
The Portuguese bank issue “is a sharp reminder that the crisis can come back,” said Jane Foley, senior currency strategist at Rabobank International, in a telephone interview from London. “The euro is down. But at $1.36, it’s still extremely resilient.”
The euro fell 0.2 percent to $1.3609 at 9:21 a.m. New York time after falling 0.3 percent, the biggest decline since July 3. The yen rose 0.5 percent to 101.14 versus the dollar and reached 101.07, the strongest level since May 21. The Japanese currency rose 0.7 percent to 137.68 per euro.
Benchmark U.S. 10-year note yields dropped five basis points, or 0.05 percentage point, to 2.50 percent. The Stoxx Europe 600 Index fell for a fifth day, losing 1.5 percent, while Standard & Poor’s 500 Index futures dropped 1 percent.
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Portuguese worries hit demand at Greek debt sale, bruise periphery
Concern about the health of a parent company of Portugal's largest bank hurt bonds from the euro zone's periphery on Thursday, curbing demand at Greece's second debt sale following its 2012 default.
It was the first significant episode of contagion for peripheral markets in 2014. Debt yields in those markets reached record lows in the first half of the year, helped by ultra-easy European Central Bank policies that let countries sell debt easily regardless of their ratings or economic situation.
Espirito Santo Financial Group, the largest shareholder in Portugal's Banco Espirito Santo, said on Thursday it had decided to suspend its shares and bonds, citing "material difficulties" at its parent company, ESI.
Separately, Portugal's securities market watchdog, CMVM, said it was analysing a major investment by Portugal Telecom in the debt of Rioforte, a holding company of the Espiroto Santo group.
Sources told Reuters on Wednesday that Espirito Santo was considering debt-for-equity swaps and may ask for more time to repay debts, as it grapples with the financial problems.
The government in Lisbon has repeatedly said that BES is isolated from the holding company's problems and there is no risk to public finances. However, the turmoil has led to a sharp sell-off in Portuguese government bonds and had repercussions for other markets as well.
Greece's sale of three-year bonds drew mediocre demand compared with recent offerings from euro zone peripheral issuers. Athens raised 1.5 billion euros, well below the 2.5 billion to 3 billion euros it was widely expected to achieve.
Total bids were only 3 billion euros. That looked lacklustre to many market players who are used to seeing order books several times that size at a peripheral euro zone debt sale.
Spain's Banco Popular Espanol, meanwhile, was forced to postpone the sale of contingent convertible debt citing poor market conditions, according to a lead manager on the planned deal.
Guido Barthels, chief investment officer at Luxembourg-based Ethenea, was initially interested in the Greek bond sale but was put off by what was happening in Portugal.
"It is not a good day to come to the market for Greece," Barthels said. "Given what's happening in Portugal, it does not make a whole lot of sense to touch that."
Yields on Portuguese 10-year bonds rose 21 basis points to 4.01 percent, dragging their peripheral peers with them. Greek yields were 20 bps higher at 6.32 percent. Spanish and Italian yields rose 6 bps to 2.82 and 2.94 percent, respectively.
Some market participants said contagion from Portugal appeared overdone.
"We do not think the problems emanating from the BES debacle should be seen as a systemic issue for the sovereign, and feel that the contagion effects are overdone and likely exacerbated by positioning and poor liquidity," said Martin Harvey, European bond manager at Threadneedle Investments.
"Having said that, it is a reminder that peripheral nations will continue to face sporadic mini-crises due to the deep structural problems their economies and financial systems face."
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1.36 is holding the price pretty good lets see if this support will prove to be worthy again or not im still uncertain about the pair
the eur/usd still looking down words may be today will hit at 1.35
French current-account deficit widens
France's current account deficit was wider in May than in April as the goods deficit rose and the services surplus shrank, data from the Bank of France showed Friday.
The euro zone's second largest economy recorded a 3.1 billion euro ($4.2 billion) current account deficit in May compared to EUR2.3 billion in April.
The May goods deficit reached EUR3.5 billion from EUR3.2 billion in April. The services surplus narrowed to EUR1.4 billion from EUR1.9 billion over the same period.
Although yesterday session looks like a panic sell-off on EURUSD, the market is still trading in the middle of its one month range so trading conditions are being controlled. The situation in Portugal should be watched closely by traders to determine whether this is an isolated incident, or something that could spread to other nations.
the eur/usd still looking down words may be today will hit at 1.35
If you have sell orders opened down there, maybe it is time to think about some alternative solution.
Summer fdriday trading expected as long as EURUSD stays within 1.3575-1.3650. market is torn between a race to the bottom vs a race to the top with the dollar caught in both camps.
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Forex Trading Outlook for July 11, 2014 - YouTube
The news brought again to light the problems faced by European banks, particularly those in the European periphery (Ireland, Portugal, Spain, Italy and Greece), which has not yet fully recovered from the financial crisis. Moreover, the EU has not yet finalized its rules on how to deal with troubled banks. Lately, the market may be expressing doubts whether the plan of an ECB refinancing operation towards the long term (TLTRO) will be able to bring European banks lending again and revive the economic stability of the Eurozone. The news Thursday also showed sharp declines in industrial production in France and Italy, in May, according to previous reports of decline in production in Germany and Spain during the month. As a result of these questions, a Spanish bank had to cancel a sale of securities and trading was halted in several Italian banks.
Renovated in the European banking sector risk is negative for the euro and positive for the dollar, the yen and gold