Category: Daily Look

This week in the markets: Greek bailout reforms make waves for the euro



Greek bailout reforms were approved by eurozone finance ministers last week, meaning Greece can now obtain a four-month extension to its bailout. The euro was initially buoyed by the news but it turned out not to have a hugely positive impact.

There remain big doubts around some assurances made by the Greek government, these reforms having been outlined in a letter written by finance minister Yanis Varoufakis to Eurogroup President Jeroen Dijsselbloem. The IMF’s Christine Lagarde for one said, “in quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged.”

By Alex Edwards at UKForex, an international money transfer service

The sell-off in the euro continued towards the end of the week. EUR/USD collapsed yesterday as various technical levels were knocked out and sentiment towards the euro turned even more negative.  It meant that GBP/EUR pushed even higher, coming close to breaking through 1.38 by the end of the week.

As for GBP/USD, it made a surprise break higher through 1.55 this week. The dollar jumped higher initially as Yellen seemed to indicate on Tuesday that a lift-off in interest rates is possible at any time. The context of the headline wasn’t entirely clear, with Yellen going on to say that the Fed is preparing to consider rate hikes on a meeting-by-meeting basis, but firstly they would be removing the word ‘patient’ when describing its plan in setting rates. This would normally have been USD positive, but her comments were tempered as she finished by saying, “it is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings”.

1.55 wasn’t sustained however and the dollar strengthened come the end of the week, backed by a solid US durable goods orders report. The data showed that orders rose a seasonally adjusted 2.8% in January against expectations for 1.7%, supported by a surge in demand for core capital goods. US prelim GDP data then printed stronger than expected on Friday, further fuelling dollar strength.

The focus for the early part of this week will be on UK PMI data. The data, particularly services PMI will need to be strong for GBP/USD to hold on the 1.54 level. If the number comes in weaker than forecasts, GBP/USD is likely to break lower. US non-farm payrolls are due on Friday – employment numbers have been very strong of late and a print of 200k could well see GBP/USD give up a lot of its gains from last week and make that move back towards the big 1.50 figure.

Meanwhile, a lot of the headlines will be dominated by Greece and the doubts about the new Greek government’s potential austerity reforms. These headlines will most probably continue to weigh on the single currency. Later in the week, the ECB are set to deliver their monetary policy announcement and although no change in either rates or QE is expected, President Draghi is set to sound dovish in his accompanying press conference.  However, the fact that markets have a dovish rhetoric priced in to the value of the euro leaves the door open to a potential bounce back should he surprise a sound a little more positive or less dovish than usual.

In this week’s podcast, we cover Yellen & the hike, AUD & CAD rate previews, Jobless claims vs. USD & Greek back burner

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Buy America

Buy America

The Almighty Dollar is looking almost unstoppable. As we go to pixels, the oft-maligned global reserve currency is trading near 11-year highs, driven upward in the belief that yesterday’s strong inflation and durable goods numbers will help to push the Federal Reserve off the sidelines toward an interest rate hike during the summer months. Data

EURUSD, USDJPY, GBPUSD Pivot Points, TA – Feb. 27 2015

EURUSD, USDJPY, GBPUSD Pivot Points, TA – Feb. 27 2015

EURUSD Daily Pivots R3 1.1519 R2 1.1449 R1 1.1323 Pivot 1.1252 S1 1.1126 S2 1.1056 S3 1.1093   EURUSD eventually broke out from the lower bound of the range at 1.1277. We suspect a recovery rally is in place for a retest to this break out level after which we could see a test down

Tensions subside

Tensions subside

With the dust having cleared from the Swiss franc move, the Greece situation having been resolved (at least for now) and twenty central banks having now eased policy so far this year, FX volatility has been falling in the past week, like a caped fallen Madonna from a Brits Award stage. The CB CVIX index

EUR/USD, USD/JPY, GBP/USD Pivot Points, TA – Feb. 25 2015

EUR/USD, USD/JPY, GBP/USD Pivot Points, TA – Feb. 25 2015

EURUSD Daily Pivots R3 1.1438 R2 1.1397 R1 1.1368 Pivot 1.1328 S1 1.1299 S2 1.1258 S3 1.1229   While still staying within the range, EURUSD is starting to show signs of a possible break out to the upside as the falling trend line looks to be breached. We expect a dip down to the daily

Yellen’s testimony weakened the dollar

Yellen’s testimony weakened the dollar

In the wake of Fed Chair Yellen’s testimony yesterday, the algo and machine readable news programs will be set to buy the dollar when the word “patient” is removed from the Fed statement. Yellen stated that the removal of this word, which replaced the phrase “considerable time” for keeping the current rate that existed up

EURUSD, GBPUSD, USDJPY Pivot Points, Technical analysis – Feb. 24 2015

EURUSD, GBPUSD, USDJPY Pivot Points, Technical analysis – Feb. 24 2015

EURUSD Daily Pivots R3 1.1484 R2 1.1438 R1 1.1386 Pivot 1.134 S1 1.1287 S2 1.1241 S3 1.1188   EURUSD continues to play range bound a pattern that has been in play since early February. The price levels of 1.143 and 1.127 have been established as strong support and resistance levels. Therefore a break out from

All eyes on Janet Yellen’s testimony

All eyes on Janet Yellen’s testimony

Today’s focus will be with Fed Chair Yellen’s testimony to the Senate Banking Committee in Washington. This happens every six months and is a key element of the Fed’s accountability to the US Administration. The dollar will be looking closely for further clarification of when the Fed may start tightening rates, having moved their forward

Greece not a sure deal

Greece not a sure deal

The deal on Greece put together during the latter stages of Friday gave the single currency a lift into the weekend; EURUSD moving up above the 1.14 level. That has struggled to be sustained though, as there are still doubts regarding the measures that Greece will commit to in order to secure the funding. They

Pipping Ain’t Easy

Pipping Ain’t Easy

Currencies are trading within remarkably tight ranges this morning, with traders ignoring broader themes to focus on debt negotiations between Greece and the European Union. The German Finance Ministry rejected a Hellenic request for an extension of its aid programme last night, saying that the proposal failed to commit to uphold previously agreed reforms –