Risk Aversion Grows Following S&P Downgrade of Italian Banks
The United States dollar strengthened against most major currencies as risk aversion grew following S&P downgrade of Italian Banks and in spite of Greece passing the package of cuts needed to complete the next step towards securing a second bailout. Wall Street closed negative as the DOW declined by 0.69% and the Nasdaq by 0.80%. Crude oil fell by 0.90% to close at $99.00/barrel and Gold by 0.60% to close at $1,721/ounce. No economic data is expected today.
The Euro fell versus the Greenback on high concern that Europe’s debt crisis would worsen, despite the Greek Prime Minister’s securing approval from Parliament for austerity measures to secure a second package of aid from the European Union and International Monetary Fund. The eur/usd momentum is positive above 1.2950, and as long as the pair is trading above this the Euro may continue upward. Overall, the eur/usd traded with a low of 1.3155 and a high of 1.3283. No economic data is expected today.
The British Pound extended loses versus the United States dollar, weighed by negative sentiments. Despite that, PPI Output came out at 0.50% better than expected. The gbp/usd momentum remains bullish above 1.5700, next resistance on the 4-Hour chart is at 1.5800 and breaking this level would probably cause the British Pound to increase to 1.5900. Overall, the gbp/usd traded with a low of 1.5730 and a high of 1.5848. No economic data is expected today.
The United States dollar gained at the end of the trading week against the Japanese Yen as the Japanese currency extended losses across the board, falling to a 2-week low versus the Greenback. The usd/jpy momentum is bullish as long as the pair is trading above 77.20 and the next resistance is located at 77.80. Overall, the usd/jpy traded with a low of 77.50 and a high of 77.79. Today the Bank of Japan is expected to announce the overnight Core Rate unchanged at 0.10% and the monetary policy statement is expected to follow.
The Canadian dollar fell from a 3-month high versus its United States counterpart after European officials demanded that Greece enact greater austerity measures before winning more funding damping demand for riskier assets. In addition the currency stronger links to commodities lost grounds as crude oil fell. As long as the pair is trading below 1.0040, the United States dollar momentum is still negative. Overall, the usd/cad traded with a low of 0.9951 and a high of 1.0028. Today, the Trade Balance is expected at 0.7B versus 1.1B previously.
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