Euro Falters as Greek Bailout must pass multiple Parliaments

The uncertainty generated by the vote in the Parliaments of Germany, France and Ireland to contribute their share of the Greek bailout has snapped the Euro’s 5 days upward trend. The EU fiscal warning to Portugal will not endear the country to bondholders when it goes in search of financing as it tries to cut down its GDP deficit to 2.8% by 2013 from 9.4% this year.

Fed chairman Ben Bernanke spoke before a Joint Economic Committee yesterday. He mainly outlined that there are still difficult choices ahed in order to cut the country’s soaring deficit. His speech was very balanced on the one hand he mentioned job losses were slowing down while on the other he was concerned about the level of long term unemployment.

The US$ is stronger in the O/N trading session. Currently it is higher against 10 of the 16 most actively traded currencies in a ‘whippy’ trading range. The USD$ is higher against the EUR -0.46%, CHF -0.39%. The JPY and GBP show very little appreciation from their levels 12 hours ago. The commodity currencies are a mixed this morning, CAD +0.08% and AUD -0.05%. The market should expect the AUD to remain better bid on any pull backs (0.9326).

Forex heatmap

Crude is lower in the O/N session ($85.68 down -16c). US Dollar strength has put downward pressure on oil, even after the EIA report pointed to a decrease of 2.2 million barrels in this week’s inventories. Technical analysts have their eye on $90 by year end.

Commodities prices could fall if the USD continues to find a foothold. Gold would lose its alternative investment status if the dollar continues its rebound USD$ ($1,154). Platinum and palladium have outperformed Gold as jewelry demand and Chinese auto industry demand have picked up. Yuan revaluation is also expected to boost gold as its price would become more attractive to Chinese buyers of the metal.

The Nikkei closed at 11,273 up +68. The DAX index in Europe was at 6,274 down -3; the FTSE (UK) currently is 5,797 up +2. The early call for the open of key US indices is higher.

Note: Dean will be away traveling for the next two week’s and will return to publication on April 29th.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza