Forex4you - Analytics

    Forex4you

    565.50 6.50/10
    60% of positive reviews
    Real

    Dollar strengthens on Grexit fear safety-buying

    USD

    The dollar rose on Tuesday after investors decided to use the currency as a safe-haven due to increased uncertainty in Greece following its “No” referendum vote, and increased risk as a result of tanking equity markets in China.

    The currency was probably also marginally supported by data which showed the Trade Deficit not widening as much as analysts had expected, after it came out slightly below expectations at -41.87bn in May, when it had been forecast to widen even more to -42.75bn instead.

    JOLTS Job Openings also rose more than expected, coming out at 5363 from 5334 previously, when a fall to 5300 had been estimated.

    IBD/TIPP Economic Optimism in July, came out unchanged at 48.1 when analysts had expected it to rise to 48.8.

    EUR

    The euro traded mixed on Tuesday as investors became cautious ahead of a key summit in Brussels in which Greece was expected to submit a new list of proposals.

    In the end it was not clear whether Greece actually submitted a revised list of proposals or not, however, reports suggested part of new deal might include reducing cuts to the military budget, keeping the continued VAT break for Greek Islands and capping VAT at 13% for restaurants.

    Commentary from ECB and Euro-group officials was mixed, with some such as ECB’s Moscovici saying he was optimistic a deal could be done, whilst other’s like the head of the euro-group Jeroem Djisselbloem saying that since the No win its: “going to be very difficult.”

    Wolfgang Shaeuble, the German Finance Minister categorically ruled out a debt write-down for Greece. Overall, however, creditors seemed open to the idea of doing a deal. There were reports Greece would present more concrete proposals on Wednesday. Without knowing the details it is impossible to know how the euro might react. If there is a major debt write-down of debt, as Greece wants this could be more negative for the euro.

    Greek banks remained closed after the ECB kept a tight lid on its provision to Greek Banks and asked for more assets for collateral for loans. This meant liquidity continued to be a problem.

    On the data front the main release was German Industrial Production, which rose by a lower-than-expected 2.1% yoy in May from 1.1% previously; analysts had estimated a 2.6% rise.

    GBP

    Sterling fell in most pairs on Tuesday after the release of mixed data from the U.K and counterparts such as the dollar and the yen benefited from safety flows.

    Industrial Production in May rose by 2.1% compared to a year ago when it rose by 1.2%; this was also higher the 1.6% expected. On a month-on-month basis it increased by 0.4% from 0.3% previously when it had been expected to fall by -0.2%.

    Manufacturing Production, however, came out broadly lower, at 1.0% yoy in May from 0.1% in the previous year, when it had been expected to increase to 1.8%. Month-on-month it fell by -0.6% versus the -0.4% previously when it was forecast by 0.1%.

    The NIESR GDP estimate came out higher at 0.7% in June compared to 0.6% previously.

    JPY

    The yen strengthened slightly on Tuesday as traders focused squarely on the Greece and Eurozone next moves. Late in the New York session the currency was trading at 122.43 per dollar.

    In economic news the preliminary Leading Economic Index in Japan fell to 106.20 in May, in line with market expectations and compared to a level of 106.40 the previous month. Meanwhile the preliminary Coincident I ndex slipped to 109.2 in May from the prior month’s 111.0.

    Prime Minister Shinzo Abe’s economic adviser Koichi Hamada interviewed on Monday said that the yen could strengthen in flight to safety because of Greece, he also said that the Greek crisis is unlikely to seriously damage the Japanese economy or change the BOJ’s price outlook. However he also said that the yen could weaken as the US moves towards tightening monetary policy.

    Going forward the markets will be focusing on Japan’s current account and trade balance data scheduled for release overnight.

    USD

    The dollar rose on Tuesday after investors decided to use the currency as a safe-haven due to increased uncertainty in Greece following its “No” referendum vote, and increased risk as a result of tanking equity markets in China.

    The currency was probably also marginally supported by data which showed the Trade Deficit not widening as much as analysts had expected, after it came out slightly below expectations at -41.87bn in May, when it had been forecast to widen even more to -42.75bn instead.

    JOLTS Job Openings also rose more than expected, coming out at 5363 from 5334 previously, when a fall to 5300 had been estimated.

    IBD/TIPP Economic Optimism in July, came out unchanged at 48.1 when analysts had expected it to rise to 48.8.

    EUR

    The euro traded mixed on Tuesday as investors became cautious ahead of a key summit in Brussels in which Greece was expected to submit a new list of proposals.

    In the end it was not clear whether Greece actually submitted a revised list of proposals or not, however, reports suggested part of new deal might include reducing cuts to the military budget, keeping the continued VAT break for Greek Islands and capping VAT at 13% for restaurants.

    Commentary from ECB and Euro-group officials was mixed, with some such as ECB’s Moscovici saying he was optimistic a deal could be done, whilst other’s like the head of the euro-group Jeroem Djisselbloem saying that since the No win its: “going to be very difficult.”

    Wolfgang Shaeuble, the German Finance Minister categorically ruled out a debt write-down for Greece. Overall, however, creditors seemed open to the idea of doing a deal. There were reports Greece would present more concrete proposals on Wednesday. Without knowing the details it is impossible to know how the euro might react. If there is a major debt write-down of debt, as Greece wants this could be more negative for the euro.

    Greek banks remained closed after the ECB kept a tight lid on its provision to Greek Banks and asked for more assets for collateral for loans. This meant liquidity continued to be a problem.

    On the data front the main release was German Industrial Production, which rose by a lower-than-expected 2.1% yoy in May from 1.1% previously; analysts had estimated a 2.6% rise.

    GBP

    Sterling fell in most pairs on Tuesday after the release of mixed data from the U.K and counterparts such as the dollar and the yen benefited from safety flows.

    Industrial Production in May rose by 2.1% compared to a year ago when it rose by 1.2%; this was also higher the 1.6% expected. On a month-on-month basis it increased by 0.4% from 0.3% previously when it had been expected to fall by -0.2%.

    Manufacturing Production, however, came out broadly lower, at 1.0% yoy in May from 0.1% in the previous year, when it had been expected to increase to 1.8%. Month-on-month it fell by -0.6% versus the -0.4% previously when it was forecast by 0.1%.

    The NIESR GDP estimate came out higher at 0.7% in June compared to 0.6% previously.

    JPY

    The yen strengthened slightly on Tuesday as traders focused squarely on the Greece and Eurozone next moves. Late in the New York session the currency was trading at 122.43 per dollar.

    In economic news the preliminary Leading Economic Index in Japan fell to 106.20 in May, in line with market expectations and compared to a level of 106.40 the previous month. Meanwhile the preliminary Coincident I ndex slipped to 109.2 in May from the prior month’s 111.0.

    Prime Minister Shinzo Abe’s economic adviser Koichi Hamada interviewed on Monday said that the yen could strengthen in flight to safety because of Greece, he also said that the Greek crisis is unlikely to seriously damage the Japanese economy or change the BOJ’s price outlook. However he also said that the yen could weaken as the US moves towards tightening monetary policy.

    Going forward the markets will be focusing on Japan’s current account and trade balance data scheduled for release overnight.


    To leave a comment you must or Join us


    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree