Data/Event Risks
- USD: Lots of potential event risk today, with numerous releases later, including durable goods orders, Case-Shiller house prices and consumer confidence. Dollar has lost some impetus in recent days – month-end flows may provide some brief respite.
- GBP: Major focus is the Q3 GDP figures – the preliminary estimate was a surprise +1.0%. Sterling has taken a backseat recently to other majors.
- EUR: Greek debt deal will be dissected today. Package of EUR 43.7bn to be released progressively as certain conditions are met, with first installment to be paid December 13th. The interest rate on the loans has been reduced, the maturity of the loans has been lengthened from 15 years to 30 years, and an interest repayment-deferral of 10 years has been granted. Greece also likely to attempt a debt buyback.
Idea of the Day
Now that the Greek deal has been inked and signed, currency markets are likely to switch focus to Spain and America’s fiscal cliff. The former needs close attention as Catalonians are clearly minded to go for independence. Re the latter, Republicans seem more open to higher revenue as part of a deal, as long as the Democrats agree to reduced entitlements. The gap between the two sides is still very wide though, so plenty of potential for disillusionment in markets over coming weeks, which could help the dollar.
Latest FX News
- EUR: Traders had plenty to think about yesterday, including the Catalan vote for independence, Spain’s admission it might need EUR 40bn in aid, and the Greek aid package. Lots of selling interest at higher levels prevented a move through 1.30. Might see some retracement in coming days.
- JPY: Extensive yen shorts have been covering to some degree in recent trading sessions. Indeed, USD/JPY fell below 82 for a time overnight, before determined yen selling re-emerged.
- AUD: Got a brief lift from the Greek debt-deal announcement, reaching 1.0490. Appears to be some concentrated selling interest up at these levels. Also, bulls will be encouraged if September 21st high of 1.0519 broke. That said, RBA still likely sitting on top, making it tougher for the bulls.
- GBP: Has been resilient in the last couple of weeks, without attracting any real attention. Appointment of Mark Carney as next BoE Governor will be broadly welcomed by foreign investors.
Further reading:Â EUR/USD Close to Long-Term Downtrend Resistance
