Germany approves bailout; S&P downgrades EFSF outlook
City Index February 28, 2012 1:00 PM
<p>Germany approves bailout; S&P downgrades EFSF outlook. As expected and with a large majority, the Greek aid proposal was approved with 496 votes in favor, […]</p>
Germany approves bailout; S&P downgrades EFSF outlook. As expected and with a large majority, the Greek aid proposal was approved with 496 votes in favor, 90 against and 5 abstentions. An approval of the Bundestag, the upper house of Parliament representing the 16 states, is not necessary. On the other hand, the euro has been hurt by the S&P downgrade of the EFSF outlook and the bullish movement of the last days has been undermined for this decision.
Range: 1.3397 – 1.3451
Euro-dollar closed in New York at 1.3395, after pivoting around 1.3400 in late New York trade. The rate marked low into early Asian dealing at 1.3391 before edging higher, finding initial resistance around 1.3415. Brief show back under 1.3400 saw a fresh demand emerge to step the rate to an eventual high of 1.3452, after reported stops above 1.3435 were triggered. Offers remain in place toward 1.3455 with next reported stops placed above 1.3460. A break here to turn attention towards recent highs at 1.3480-1.3487, with offers seen here and placed toward the next option barrier at 1.3500. Support seen back at 1.3400 with Asian sovereign interest was suggested at 1.3385-1.3380. Further demand noted close behind at 1.3375-1.3355.
Range: 1.5825 – 1.5855
Cable closed in New York at 1.5820, off pullback lows of 1.5810 after the rate had posted extended highs during Monday’s Asian session of 1.5904. The rate posted an early Asian low of 1.5815 before edging higher through the session to 1.5848, as the rate tracked euro-dollar’s recovery, though the move was slightly tempered as euro-sterling edged up from 0.8464 to 0.8488. Cable opens Europe around 1.5845, the cross around 0.8478. Cable demand seen at 1.5810-1.5800 ahead of 1.5790, with stops placed below this latter level. A break here to meet minor demand at 1.5780 ahead of 1.5765-1.5760. Resistance seen at 1.5850-1.5860, a break to open a move towards 1.5880-1.5885 ahead of 1.5900-1.5905, stops above 1.5910. Stronger offers noted between 1.5940-1.5960, with barrier interest getting a mention at 1.6000.
Range: 1,766.14 – 1,774.11
Gold is pushing higher in Asia following S&P’s downgrade of EFSF’s outlook to negative, and talk that Merkel would have to rely on opposition support to gain Germany’s approval of the bail out. The Bundestag eventually passed the deal, but the metal slipped into the New York close at 1,767.60. A gentle rise in crude prices in Asia is also adding support along with lingering concerns over the Middle East and media focus on any potential strike against Iran from Israel or the United States.
Gold has initial support at 1,761.60, a break there leading down to 1,749.35. On the topside offers are seen at 1,779.50 ahead of the 1,800 level which should offer much sterner resistance.
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