Euro shorts pared back ahead of the main event as G20 rumours spook USD longs
City Index June 15, 2012 1:00 PM
<p> EUR/USD Range: 1.2614-1.2647 Support: 1.2520 Resistance: 1.2680 The market continues to square euro shorts ahead of the week-ends big election but for me […]</p>
The market continues to square euro shorts ahead of the week-ends big election but for me either outcome can’t boost the euro as pro-bailout result won’t fix the problems in Spain or Italy. The single currency was given a further boost in late New-York with an unknown G20 ‘source’ cited as saying Central Banks are preparing for coordinated action to provide liquidity, if needed, after the Greek elections. Moody’s downgraded long term debt and deposit ratings for five Dutch banks but the market seemingly ignored the news as position adjustment seems to be the order of the week ahead of the week-end.
Range: 1.5537 – 1.5558
Sterling trades in a narrow range with intraday traders looking to play 1.5480-1.5580 with the UK trade balance this morning the highlight. Last night stimulus was announced at the Mansion House where BoE Governor King made announcements to boost credit by £100 billion as leaked in yesterday’s FT. The BoE will provide cheap finance for banks at below market rates for several years providing they continue to lend to UK businesses.
The BOJ announced no new monetary easing steps overnight and kept rates unchanged despite calls from the IMF last week-end. The Japanese Central Bank highlighted that economic activity in Japan had picked up but the Eurozone risks remain a threat to global markets. The JPY strengthened after the announcement dropping from 79.30 to the session lows where we remain and with the threat of co-ordinated liquidity measures from the G20 pressure is likely to remain on the pair with major support sighted at 78.00.