Daily Market Outlook by AceTrader


AceTrader.com Representative
Market Review - 19/06/2010 01:11 GMT

Euro hovers near 3-week high on short-covering

Euro ended Friday's trading with a biggest weekly gain since May 2009 due to broad-based rebound in global equities and recent worries over European debt crisis had eased.

Although euro rose marginally above Thursday's high of 1.2413 to 1.2417 in European morning, the pair retreated to 1.2353 in US session on cross-selling in euro as eur/jpy fell from 112.81 to 111.93 while eur/chf slid to a fresh lifetime low of 1.3718. The gain of Swiss franc after SNB said deflation risks had receded on Thursday continued to pressure the single currency. However, euro managed to rebound intra-day on short-covering and ended the day at 1.2385 in New York trading.

Versus the Japanese yen, the greenback edged higher to 91.08 in Australia after the selloff to 90.51 in previous NY session, however, the pair retreated again after meeting renewed selling there and traded sideways in Asia. The greenback later resumed recent decline to a low of 90.45 in European mid-day before staging another rebound.

In other news, the highlight of BOJ minutes was the need for the central bank to pay great attention to the risk factors that could worsen the Japanese economy. Japan's government said it aims to achieve a positive CPI in the fiscal year 2011/12 by boosting investment in clean energy and other areas with strong potential for growth.

The British pound traded with a firm undertone in Asia initially and rose to 1.4887, the highest level since May 13 after the release of U.K. economic data as Britain's budget deficit came in lower than expected in May. U.K. PS net borrowing and PSNCR came in at 16.02 billion pounds and 11.963 billion pounds respectively. However, cable retreated from the said high in tandem with eur/usd and fell to 1.4771 in US session before recovering.

Spot gold resumed its LT uptrend to $1261.70 an ounce in NY mid-day as investors continued to buy precious metals as an alternative asset.

In other news, ECB's Gonzalez-Paramo said stress tests should be coordinated by individual governments and banks and each country must decide whether it would publish stress test at individual bank level. He added Spain had special challenges because of unlisted saving banks and could not say whether Spanish banks would be too dependent on ECB funding in current climate.

Economic data to be released next week include: U.K. Rightmove hse prices, Japan All industry index on Monday, Swiss Trade balance , Germany Ifo index , EU Current account , Consumer Confidence , Canada CPI , U.S. Existing home sales on Tuesday, New Zealand Current account , Germany Services PMI , Manufacturing PMI , BoE releases minutes , CBI distribution trade , U.S. New home sales , Fed rate decision and FOMC meeting on Wednesday, New Zealand GDP, Japan CSPI , Trade balance, EU Industrial orders, U.S. Durable goods on Thursday, New Zealand Trade balance , Japan CPI, U.S. PCE , GDP and 2010 G8 / G20 Summit on Friday