EUR/USD breaks last week's high to resume recent rally as dollar weakness returns. USD/CHF dives to new record low of 0.8744 while AUD/USD is back pressing record high of 1.0773. Data from US saw S&P Case-Shill 20 city house price dropped -3.3% yoy in February. Consumer confidence beat expectation and improved to 65.4 in April. Euro is rather unbothered by news on the debt crisis. Sterling, though, was weighed down by much worse than expected CBI trends total orders, which dropped sharply to -11 in April. Swiss trade surplus narrowed to CHF 1.09b in March while UBS consumption indicator improved to 1.66.
According to Eurostat report, aggregate Eurozone debt was at 85.1% of GDP at the end of 2010, with 12 countries exceeding 60% debt-to-GDP threshold. That compared to 79.3% at the end of 2009. The biggest debtors are Greece (142.8%), Italy (119.0%), Belgium (96.8%), Ireland (96.2%) and Portugal (93.0%). Deficit to GDP ratio, though, dropped from 6.3% in 2009 to 6.0% in 2011. Ireland's deficit to GDP ratio of 32.4% was worse, with Greece at 10.5%, UK at 10.4%. Spain and Portugal were among the worst five countries. ECB Board member Juergen Stark warned that a sovereign debt restructuring in a euro zone state could trigger a banking crisis that "overshadow the effects of the Lehman bankruptcy." Spain raised EUR 2b of 3- and 6-month bills together at a higher yield of 1.37% and 1.867%, up from prior 0.9% and 1.4% respectively. Though, demand was solid with bid-to cover ratio for the three-month bill was solid at 4.43.
Bloomberg reported that China will set the capital target for the give largest bank in the country above the minimum 11.5% on concern of increasing credit risks. The capital adequacy ratios was said to be up to 11.8% in 2011. The move is believed to be used to curb loans on concern of accelerating inflation and surge in real estate prices. However, the rumor was denied by the China Banking Regulatory Commission, which said that the capital rules was unchanged a the requirement for the top five mains remains at 11.5%.
FOMC meeting will be a main event this week. The focus will be on the first post-meeting press briefing as policymakers will very likely leave the Fed funds rate unchanged at 0-0.25% and the asset-buying program at $600B with expiry in June 2011. The Fed attempts to use these briefing to shape market expectations on inflation and monetary policies. At his first briefing of this kind, Chairman Ben Bernanke will clarify the Fed's consensus on inflation outlook, the sources of inflation and how the stance of monetary policy may influence inflation expectations. We expect the themes will be that recent upward pressures on inflation are transitory and the central bank will leave interest rates at exceptionally low levels for an extended period.
Outlook in dollar index remains bearish with 75.81 resistance intact and current decline should extend further towards cluster projection level of 61.8% projection of 88.70 to 75.63 from 81.31 at 73.27, 100% projection of 89.62 to 74.19 from 88.70 at 73.27. This 73.27 level will be closely watched on possibly of rebound. But based on accelerating downside momentum, it seems not likely. Sustained trading below 73 will pave the way to a new all time low below 70.70 made in 2008.
Source: http://www.actionforex.com
According to Eurostat report, aggregate Eurozone debt was at 85.1% of GDP at the end of 2010, with 12 countries exceeding 60% debt-to-GDP threshold. That compared to 79.3% at the end of 2009. The biggest debtors are Greece (142.8%), Italy (119.0%), Belgium (96.8%), Ireland (96.2%) and Portugal (93.0%). Deficit to GDP ratio, though, dropped from 6.3% in 2009 to 6.0% in 2011. Ireland's deficit to GDP ratio of 32.4% was worse, with Greece at 10.5%, UK at 10.4%. Spain and Portugal were among the worst five countries. ECB Board member Juergen Stark warned that a sovereign debt restructuring in a euro zone state could trigger a banking crisis that "overshadow the effects of the Lehman bankruptcy." Spain raised EUR 2b of 3- and 6-month bills together at a higher yield of 1.37% and 1.867%, up from prior 0.9% and 1.4% respectively. Though, demand was solid with bid-to cover ratio for the three-month bill was solid at 4.43.
Bloomberg reported that China will set the capital target for the give largest bank in the country above the minimum 11.5% on concern of increasing credit risks. The capital adequacy ratios was said to be up to 11.8% in 2011. The move is believed to be used to curb loans on concern of accelerating inflation and surge in real estate prices. However, the rumor was denied by the China Banking Regulatory Commission, which said that the capital rules was unchanged a the requirement for the top five mains remains at 11.5%.
FOMC meeting will be a main event this week. The focus will be on the first post-meeting press briefing as policymakers will very likely leave the Fed funds rate unchanged at 0-0.25% and the asset-buying program at $600B with expiry in June 2011. The Fed attempts to use these briefing to shape market expectations on inflation and monetary policies. At his first briefing of this kind, Chairman Ben Bernanke will clarify the Fed's consensus on inflation outlook, the sources of inflation and how the stance of monetary policy may influence inflation expectations. We expect the themes will be that recent upward pressures on inflation are transitory and the central bank will leave interest rates at exceptionally low levels for an extended period.
Outlook in dollar index remains bearish with 75.81 resistance intact and current decline should extend further towards cluster projection level of 61.8% projection of 88.70 to 75.63 from 81.31 at 73.27, 100% projection of 89.62 to 74.19 from 88.70 at 73.27. This 73.27 level will be closely watched on possibly of rebound. But based on accelerating downside momentum, it seems not likely. Sustained trading below 73 will pave the way to a new all time low below 70.70 made in 2008.
Source: http://www.actionforex.com
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