Asian Bank Cuts Credit Lines for French Banks – EUR/USD

5

One Asian bank has cut credit lines for French banks. 5 more banks in Asia are considering the same: no more credit for French banks.

EUR/USD is lower, at 1.4135, below the support line of 1.4160. Further support is at 1.41 and 1.4070.

The fear in Asia is that French banks are exposed to too much problematic debt, especially from Greece.  This is a new credit crunch – the first since 2008.

This follows the yesterday’s rumors of a bankruptcy in Societe Generale – a rumor that was denied, but that can happen if credit is frozen.

Here is quote from Reuters’s report on it:

The banks in Asia and the sources — a mix of risk officers, senior traders and loan bankers — could not be identified because of the sensitive nature of the information.

“We’ve cut. The limits have been removed from the system. They have to seek approval on a case-by-case basis,” the treasury risk official said. The bank official declined to name the French banks.

French debt crisis

The weekly report on US jobless claims, released at the same time, showed a drop to 395K, the lowest since April and slightly better than 400K that was expected.

US trade balance disappointed: the deficit rose to 53 billion, significantly more than 47 billion that was expected.

EUR/USD moves these days on the European debt crisis that is now focusing on French banks, after Trichet managed to stabilize the Italian and Spanish bond markets.

Update: EUR/USD is now recovering thanks to moves in the Swiss franc – the SNB is fighting the strength of the franc, especially against the euro, and this indirectly leads to strength in euro/dollar.

For more on EUR/USD, see the euro dollar forecast.

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

5 Comments

  1. Santosh Kompalwar on

    thats worst.. do you think EUR/USD pair will bounce back today or in few days more to a level of 1.43? or this is a long downturn started for EUR with no recovery?

  2. Thanks for your comments. The movements are very wild – we are just seeing a big bounce back. I don’t know what will happen.

  3. Pingback: EUR/USD Outlook – August 8-12 | Forex Crunch

  4. Pingback: EUR/USD Aug 12 – Ignoring French News, Steady in Range | Forex Crunch

  5. Pingback: Société Générale Leveraged More Than Lehman | Forex Crunch