Dollar trades at 97 cents

Dollar trades at 97 cents

UPDATE: THE Aussie dollar is slightly lower, trading in a tight range throughout the morning, ahead of the release of Chinese economic data.

At noon, the dollar was trading at 97.56 US cents, down from 97.74 cents yesterday.

Last night, the Australian dollar fell as low as 96.90 US cents, its lowest level since November 28.

CMC markets foreign exchange dealer Tim Waterer said there was not much of a reaction in currency markets after a summit of EU leaders ended.

The meeting showed that France and Germany are divided on how to resolve the euro zone debt crisis, particularly on the issue of the European Central Bank issuing its own eurobonds.

"We had a marginal rise in Asian equity markets, which is helping support the currency," Mr Waterer said.

"We're still having no buying impetus for the currency today, that may come if we happen to get a good reading in the Chinese PMI."

This afternoon, the May HSBC purchasing managers index from China will be released.

"Given the market is still very much risk averse due to the situation in Europe, if that number is below expectations tha t could send the Aussie retreating towards the 97.00 cents," he said.

Meanwhile, the Australian bond market was stronger at noon.

At noon, the June 10-year bond futures contract was trading at 96.915 (implying a yield of 3.085 per cent), up from 96.890 (3.110 per cent) yesterday.

The June three-year bond futures contract was at 97.630 (2.370 per cent), up from 97.620 (2.380 per cent).

In overnight trade, early on Thursday morning, the three-year contract hit an all-time high of 97.700.

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US Dollar Continues to March Higher as S&P 500 Treads Water

US Dollar Continues to March Higher as S&P 500 Treads Water

THE TAKEAWAY: US Dollar continues to defy overbought technical studies to push higher but the S&P 500 is conspicuously lacking of direction near familiar levels.

S&P 500 â€" Prices continue to tread water between 1292.90 and 1322.10, the October 27 high and the 23.6% Fibonacci retracement, respectively. A break higher exposes the 38.2% Fib at 1341.70. Alternatively, a daily close below support initially exposes 1272.60.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL â€" Prices continue to test resistance-turned-support at 90.49, with a break lower initially exposing the 61.8% Fibonacci retracement level at 88.54. Near-term resistance lines up at 92.51, a former support marked by the December 16 low, with a push above that targeting the February 2 low at 95.41.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD â€" Prices recoiled from resistance marked by the 1600/oz figure as well as the 50% Fibonacci retracement level at 1599.17, taking out support at 1582.10 marked by the 38.2% level and exposing the next downside objective at 1560.98. A break below this boundary exposes the 1522.50-1532.45 area. The 1582.10 level is acting as resistance.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR â€" Prices continue to push higher after taking out resistance in the 10134-41 area marked by the 76.4% Fibonacci expansion and the October 2011 swing high. The bulls target the 100% level at 10241 as the next major upside objective. RSI studies are at their most overbought since prices set the last major top however, warning that the treat of a pullback is significant. The 10134-41 region is now recast as near-term support.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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UK Pound Starts To Strengthen Against The Australian Dollar

UK Pound Starts To Strengthen Against The Australian Dollar

The suggestion that the reserve Bank of Australia may make further interest rate cuts in the months ahead is weighing on the value of the Australian Dollar. So too is the slowdown in Chinese economic activity.

Also influential is the change of heart amongst international investors who are less inclined to buy into the high yielding interest rates that Australia offers because they are fearful of events in Europe undermining the Aussie Dollar and causing them to lose money in exchange rate movements.

In essence, having driven the weakening Aussie Dollar to the highest level since last October, the Pound lost some of that momentum and dropped three cents. It looks set to fall a little further and we are likely to see A$ 1.56 before any turnaround in this short term decline.

Events in Europe are strengthening the Pound but the Aussie Dollar is largely powered by investor sentiment and investors are fickle beasts so we should not be convinced by any of these spikes and troughs until they breach significant technical levels.

That hasn’t happened on either the upside or downside in the Sterling â€" Australian Dollar exchange rate so, it is best to plan using A$ 1.56 and A$ 1.62 as your outer limits in the short term.

Thanks to the folks at halofinancial for providing this analysis

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Are Momma’s Boys to Blame for the Euro Crisis?

Are Momma’s Boys to Blame for the Euro Crisis?

Noting the confluence of topics about the baby boomer generation and financial woes of our youth today, I had this nifty chart sent to me today. Many of you may have seen it but it is interesting nonetheless. Basically, this is a chart comparing the CDS’s of European countries against the percentage of males living at home.

Many online blogs and advice sites seem to have a common message which says to not move back home no matter what. There is something to be gained by putting it out there and having to scrape by on your own for a few years while you find solid footing. I’ve even seen articles which point to employers preferring candidates who don’t live at home because they are out on the edge and don’t have the safety net that living at home provides.

Obviously, correlation doesn’t equal causation but I think it raises a decent question. Does living at home create more complacent men who are less ready to strike out into the world? I’ve always struggled to find an opinion on this as I think that moving home can certainly be beneficial until you get a decent job (or during an unpaid internship) but there is a lot to be said for having to strike out on your own and support yourself. What do you guys think? Obviously living at home for a 26 year old man isn’t desirable but is it really as terrible as it is made out to be? Is it contributing to the current financial malaise?

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US Dollar Index Classical Technical Report 05.23

US Dollar Index Classical Technical Report 05.23

By DailyFX on May 23, 2012 01:55:01 GMT

The market has now taken out some major resistance by 10,100 to open the door for fresh upside and a bullish continuation over the coming weeks. Next key resistance comes in by the 10,300 area, although, with daily studies now overbought, look for opportunities to buy on dips back towards 10,000 where a fresh higher low is now sought out.

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Rupee hits 56 versus dollar, Reserve Bank cautious

Rupee hits 56 versus dollar, Reserve Bank cautious

Last Updated: Wed, May 23, 2012 14:42 hrs

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The rupee dropped to a record low against the dollar on Wednesday, sparking mild intervention from a RBI seen by traders as reluctant to be more aggressive against such a strong down trend.

The rupee touched the symbolically significant level of 56 to the dollar as concerns about the euro zone prompt global risk aversion and expose India's domestic vulnerabilities, most prominently a widening current account deficit and sluggish policy reforms.

The rupee has now fallen more than 5 percent this year against the dollar to make it the worst-performing Asian currency monitored daily by Reuters. It has dropped more than 13 percent from its 2012 high reached in February.

Currency traders say the slide in the rupee in recent sessions has been made easier by a cautious Reserve Bank of India which has refrained from heavy dollar selling.

"If there is global risk aversion, how can the RBI defend the currency? The conditions prevailing are such that the fall in the rupee is justified," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

However, inaction carries dangers of its own, traders said, because it would deepen an impression of a central bank that is unwilling to take action. It does have measures to hand, such as selling dollars to oil importers, they said.

Still, it is important for the RBI to intervene in the market from time to time to be able to stem any steep fall, C. Rangarajan, the chairman of the prime minister's economic advisory council, told television channel CNBC-TV18.

"Sometimes markets always have a tendency to overshoot. I think if the impression goes that it will not intervene at all, it will have an adverse impact," Rangarajan said.

The drop on Wednesday to 56 per dollar marked the sixth consecutive day tha t the currency had hit a record low. The RBI's intervention, which dealers described as mild, was the first since Thursday.

The currency was weighed down by relentless dollar demand from oil importers and other companies.

Traders are looking ahead to an RBI board meeting scheduled for Thursday in Mussoorie, although the central bank tends not to make major announcements following such meetings.

The central bank has taken several measures to stem the rupee's slide, including raising deposit rates for non-resident Indians and forcing exporters to convert half of their foreign currency holdings into rupees, but none has had any notable imp a ct.

The RBI has shied away from action that traders believe would make a significant difference, including most immediately selling dollars directly to oil importers.

Nomura argues such a move would reduce market dollar demand by $ 8.8 billion per month, or the average monthly value of petroleum and crude imports in the last fiscal year.

However, such a move would expose the central bank to greater market risk and erode its already diminishing stockpile of dollars.

Some observers expressed sympathy with the RBI's position, given stronger actions carry their own risks.

"There are costs associated with each response and these in any case will only be stop-gap measures that won't address the underlying macro imbalances including the unsustainably large CA (current account) deficit," CLSA economist Rajeev Malik wrote in a recent note.

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Austerity imperils euro: Greece’s left

Austerity imperils euro: Greece’s left

The leader of Greece's radical left party, Syriza, has warned the European Union that the German-imposed tough economic measures could eventually overthrow the eurozone in its entirety.

Speaking upon arrival in Germany on Tuesday, Alexis Tsipras, a frontrunner in Greece’s forthcoming repeat elections, stressed that Athens’ international creditors should confirm their “errors” and change their policies "to avoid a catastrophe."

Meanwhile, European leaders have expressed hope that Greece’s second parliamentary elections, expected on June 17, would produce a strong government and put an end to the country’s political and economic turmoil.

European officials also insisted that the outcome of the vote would determine whether Greece stays in the 17-nation bloc or not, stressing that in any case the new administration must comply with the austerity measures the country agreed to with its European neighbors in exchange for endorsement of the second financial bailout.

The 37-year-old leader of the Radical Left party reiterated his plan to abandon the tough spending cuts, but said that he would not seek to leave the eurozone.

"To the contrary, it would mean that we have a chance of saving the euro," he added.

However, he warned that if the EU leaders continue insisting on their "wrong solutions of austerity" measures, they could finally force Greece out of eurozone and that "would represent a much greater danger for the euro."

Labeled as the “Greek Che Guevara,” Tsipras also declared that saving Greece from economic turmoil should be in the eurozone’s own interest, because "if the Greek patient cannot be treated, then the crisis will spread to all of Europe."

Greece will hold new parliamentary elections in less than a month after previous polls earlier in May failed to give any party an absolute majority.

Syriza, which is expected to win the coming votes, came in second in the first elections due to its pledge to overturn the controversial austerity measures.

SAB/GHN/MA

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Asian Stocks, Euro Fall on Greece Exit Concerns

Asian Stocks, Euro Fall on Greece Exit Concerns

By David Yong - 2012-05-23T00:58:46Z

Enlarge image

Asian Stocks Slide

Tomohiro Ohsumi/Bloomberg

Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo, Japan.

Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks fell, reversing a two- day advance, and oil declined on concern that Greece is making preparations to quit Europe’s currency union. Australian and New Zealand currencies slumped and the euro dropped.

The MSCI Asia Pacific Index (MXAP) dropped 1 percent as of 9:58 a.m. in Tokyo. Standard & Poor’s 500 Index futures lost 0.3 percent, after the benchmark erased gains in the final hour of trading yesterday. Oil declined 0.2 percent and copper fell 0.8 percent. The Australian dollar and New Zealand dollar both weakened 0.5 percent. The euro slid 0.2 percent, extending the biggest loss in 10 weeks yesterday.

Greece is considering preparations to leave the 17-nation currency, Dow Jones reported yesterday, citing former Prime Minister Lucas Papademos even as the Group of Eight nations urged the nation to stay in the euro zone. The concern overshadowed a report showing an improvement in U.S. home sales in April and heightened speculation Europe and China will step up efforts to bolster global economic growth.

“The comments watered down optimism ahead of the European summit,” said Kim Young Sung, a fund manager in Seoul at Samsung Asset Management, which manages $ 98.3 billion. “There is uncertainty whether the actions being offered by the EU today will prevent the Greek exit.”

The Australian dollar traded at a six-month low of 97.65 cents and the so-called kiwi reached 75.16 cents, a level not seen since mid-December. South Korea’s won retreated 0.6 percent to 1,171.05 per dollar.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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