Tuesday, June 28, 2011

Forex Morning Overview - Forex Market Expectation

Previous session overview
The euro held steady against the dollar and the yen in Asia Tuesday as growing optimism that Greece will approve a package of austerity measures Wednesday prodded traders to refrain from making fresh bets. 

Earlier in the day, short covering that triggered stop-loss purchases above USD1.4300 sent the single currency as high as USD1.4330. But the gains were eroded later due to the absence of fresh news related to the Greek debt crisis. 

At 0450 GMT, the euro was at USD1.4298 from USD1.4283 late New York trade Monday. The dollar was at JPY80.82 from JPY80.89, while the euro was at JPY115.55 from JPY115.53. 

European governments said Monday they want private creditors to roll over as much as EUR30 billion of Greek government bonds that come due by 2014.

The proposal drafted by French banks and insurers calls for half of the proceeds from maturing Greek bonds to be reinvested in 30-year Greek bonds. Furthering the credibility of that plan, the European Central Bank said it is receptive to the French proposal on Greece, if it is voluntary.

The U.K. pound was at USD1.5973 from USD1.5988 late Monday. The dollar was at CHF0.8353 from CHF0.8355.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 75.278 from 75.314. 

The Australian dollar was slightly higher late Tuesday but markets remained cautious ahead of a vote in Greece this week on austerity measures needed to underpin an international debt bailout for the beleaguered country. At 0530 GMT, the Australian dollar was at USD1.0447, up from USD1.0414 late Thursday. Against the Japanese yen, the Australian dollar was at JPY84.39, up from JPY84.08.
Market expectation
The EURUSD erases earlier gains but the downside is likely to be limited amid growing optimism that Greece will approve a package of austerity measures this week. Positive news regarding Greece Tuesday and a rebound in the stock market are making it tough to sell the euro against the dollar, say dealers.

The Pound, now mixed, is likely to hold in narrow ranges against the dollar and euro pending more news on Greece and hinging on how risk-taking develops during the session. Several U.K. events, including gross domestic product data and the Bank of England governor's evidence to MPs on the Inflation Report, could also tip sentiment.

European stocks are expected to start higher Tuesday following the triple-digit gain on the Dow Jones Industrial Average, and the euro is firmer after French banks drafted an agreement to roll over some Greek debt for 30 years ahead of a crucial vote in the Greek parliament this week.

by Dukascopy Bank SA