Forex Afternoon Wrap – 08/07

Jul 08, 12:47 pm
23rd December

Greece given (yet another) deadline until Sunday. Focus on FOMC today

Key Notes:

  • BRC Shop price index y/y -1.3% vs. -1.9%
  • Japan currency account 1.64Tn vs. 1.39Tn
  • Japan Bank lending y/y 2.5% vs. 2.6%
  • Japan economy watchers sentiment 51 vs. 53.2
  • UK Halifax HPI m/m 1.7% vs. 0.2%
  • UK Annual budget release
  • Canada building permits m/m -14.5% vs. -5.2%

Later:

  • FOMC meeting minutes
  • US Consumer credit m/m

The Asian markets continued on a cautious note with Greece debt crisis and the Chinese stock markets. The US Dollar was bid up yesterday as investors flocked to the safe haven and shed the risky currencies. AUDUSD declined early in the day to hit new lows around 0.73875 before stabilizing to lift off from the daily lows to trade near 0.74. The Kiwi saw a strong performance today as the currency 0.66% for the day after hitting lows near 0.6628. The NZDUSD was seen trading near 0.6712. The rally in the Kiwi comes despite the overall strength in the US Dollar.

USDJPY remained subdued as the currency continued to post sharp losses. The US Dollar opened day at 122.46Yen only to decline by -0.90% for the day, trading near 121.39.

The European trading session saw the Eurogroup summit get underway. It is believed that Greece has been given until Sunday to resolve its debt crisis. Greek Premier Tsipras’ met with firm resistance from the Eurogroup ministers and going by media reports, it is expected that failure to resolve the debt crisis by Sunday could mean an eventual exit from the Eurozone. The ECB, which has been providing the sole financial lifeline for the country has previously rejected proposals to raise the ELA funding assistance for the country with the amount frozen as 89 billion Euros. With the ELA levels unchanged, Greece’s banks remain shut with capital controls still in place. After the referendum, Greece also, as a concession saw the resignation of Finance minister Yannis Varaoufakis in a bid to build trust with its lenders.

Economic data from Eurozone was light with no major news releases. The Euro remains fairly strong against the Greenback after it fell to lows of 1.0925 yesterday and remains upbeat, trading above 1.1 handle in today’s trading session.

From the UK, the annual budget was released but it did not impact the currency markets much. The Cable remained subdued, losing -0.66% for the day, trading near lows of 1.536 after opening the day at 1.546.

The US trading session saw the Canadian building permits fall -14.5% for the month. However, considering that the print is volatile and subject to revisions, the Loonie did not react much. Last month’s building permits were revised from 11.6% to 12.1%.

Later in the evening, the US Federal Reserve will be releasing its meeting minutes from June and the markets are likely to remain cautious into the event.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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