More from Infinity
Start Trading Today!
1-888-456-8090
itc@infinitytrading.com
1-888-456-8090
itc@infinitytrading.com
© 2012 Infinity Trading Corp
December 29th, 2011
FOREX-The euro tumbled to its lowest level against the dollar since September 2010 in thin European trading Thursday after Italy’s final bond auctions of 2011 proved less than outstanding and year-end flows continued to support the dollar.
The single currency fell to $1.2858 against the dollar, extending Wednesday’s declines, while it also took a hit against the safe-haven Swiss franc and yen, falling to a fresh 10-year low against the Japanese currency.
Italy’s cost of borrowing fell slightly but the Italian Treasury only managed to sell EUR7.017 billion out of a maximum EUR8.5 billion, disappointing some market participants who had hoped for a repeat performance of yesterday’s super-successful short-term debt auction, where six-month borrowing costs were halved.
“If you look at a like-for-like comparison with the previous auction in November you get better yields, but it’s still expensive and they did not allot the full amount. So overall it’s a pretty bad auction, so that’s why the euro is falling,” said Chris Walker, currency strategist at UBS AG in London.
Continue reading »
December 14th, 2011
FOREX – The euro hit its lowest level in nearly a year against the dollar and fell more than 1% on the day against the greenback and the yen, with renewed concern over the debt crisis.
A report indicating that Germany remains steadfastly opposed to expanding the euro zone’s bailout fund put pressure on the euro. Germany rejects raising the EUR500 billion lending limit for the planned European Stability Mechanism, or ESM, Chancellor Angela Merkel told a meeting of her ruling party Tuesday, underscoring a rift at a recent European Union summit over the capacity of the euro zone’s debt crisis firewall.
Countering fears that Germany’s overall contribution to euro-zone rescues may rise further, Merkel stressed during a meeting with lawmakers of the Christian Democrats that a planned increase of funds to the International Monetary Fund by Germany’s Bundesbank was independent of government commitments to the ESM, a coalition official present at the meeting said.
Disagreement over whether to lift the EUR500 billion cap was one of the areas of discord that emerged during the EU summit last week.
The European Stability Mechanism, or ESM, will replace the temporary European Financial Stability Fund sometime next year.
“The euro remains a sell,” said Joe Manimbo, a market analyst at Travelex Global Business Payments in Washington. He added investors want to see “a willingness by the European Central Bank to ramp up government bond purchases. That would buy more time for officials, but we need some type of comprehensive solution that has been elusive to date.”
Continue reading »
December 9th, 2011
FOREX-The euro was marginally higher Friday as European Union leaders ended two days of talks on the future of the common currency with an agreement to introduce tougher fiscal rules for the 17 euro-zone nations.
“There was some increase in risk appetite because the leaders came up with something and at least made some progress,” said David Watt, senior currency strategist at RBC Capital Markets in Toronto. “If the market decides to look for details, there might be some disappointment next week.”
The leaders promised to increase the financial backstops to countries with debt problems by channelling EUR200 billion of funds to the International Monetary Fund. However, they put off until March a decision on a proposal to lift the EUR500 billion cap on the funds available to the European Stability Mechanism.
It also remains to be seen if the deal agreed upon Friday will convince the European Central Bank to intervene more forcefully in the sovereign bond market. ECB President Mario Draghi Thursday sent a very clear message that he would not, dashing market expectations that the ECB would step up its bond purchases once a convincing political solution to the crisis was in place.
Continue reading »
December 6th, 2011
FOREX – The euro was little changed Tuesday, as investors anticipated that Friday’s European Union summit might yield a breakthrough on the Continent’s debt crisis, even as Standard & Poor’s warned that many of the sovereign credit ratings within the 17-nation currency bloc were being jeopardized by mounting financial and political turmoil.
Late Monday, S&P placed the ratings of 15 euro-zone nations on negative credit watch, signaling there was a 50% chance of a downgrade within 90 days if policymakers are unable to craft a solution to the debt crisis causing upheaval across global markets.
In a move that jolted investors, the firm singled out several members of Europe’s triple-A club, including Germany and France – the euro zone’s two largest and most stable economies. On Tuesday, the firm warned that in the event of a member nation’s downgrade, Europe’s newly-inaugurated bailout fund could also see its AAA-rating marked down.
The announcement comes at a delicate time. Markets are largely in stasis ahead of a pivotal EU meeting, where officials are expected to offer policy changes to sanction fiscally-wayward members. European officials are also said to be negotiating an increase in the bloc’s bailout fund, which analysts say is insufficient to prevent the growing possibility that Italy and Spain could be shut out of capital markets.
Continue reading »
December 5th, 2011
FOREX – The euro ground higher against the dollar in European trading Monday as bond markets welcomed a new austerity plan in Italy and currency dealers were broadly optimistic at the start of a crucial week for the single currency, which is scheduled to end with a summit of European Union leaders.
Yields on benchmark Italian 10-year government bonds extended the previous week’s decline, dropping to 6.3% and leading other peripheral euro-zone bond yields down with them. The relief shown in bond markets, coupled with hopes for a positive breakthrough in the euro zone’s long-running debt crisis, helped to lift the euro to as high as $1.3460 against the dollar. It also touched CHF1.24 against the franc for the first time in two weeks.
“The reason the euro is doing better is because of all the optimism about the Italian government unveiling the austerity measures on Sunday. It’s giving hope to traders that something (positive) will happen (later this week),” said Ankita Dudani, currency strategist at Royal Bank of Scotland.
“Even though we have been here before, people are still giving (European policymakers) the benefit of the doubt,” she added, noting that with a high number of negative euro-bets still in the market there is a potential for the single currency to climb further as these bets are unwound.
Continue reading »
November 22nd, 2011
The dollar swung briefly against the yen Tuesday in Asia as investors reacted to comments by Japanese Finance Minister Jun Azumi dismissing a proposal to buy large amounts of foreign bonds as a form of intervention.
The proposal, floated by former Bank of Japan official Kazumasa Iwata, for the government to establish a yen-denominated fund worth Y50 trillion to buy overseas securities, would involve yen-selling in process.
But Azumi said “there is a high possibility (such foreign-bond buying) would be tantamount to currency-market intervention,” and that the idea of foreign bond purchases “doesn’t fit well with our thinking,” since the purpose of intervention is to counter disorderly market moves.
The dollar initially rose to Y77.35 from Y76.95 in the wake of these remarks, but fell to Y77.03 soon afterward.
Traders said they were initially confused by the way the remarks were reported. At first they thought Azumi was for the deal, which turned out not to be the case.
Continue reading »
November 18th, 2011
The euro rose Friday against the dollar in Asia on short-covering but the gains were later pared as underlying sentiment for the single currency remains weak, with a rise in borrowing costs for Spain and France casting doubts over Europe’s efforts to contain the sovereign debt crisis anytime soon.
The euro briefly rose above $1.3500 partly as uncertainty about whether the U.S. will reach an agreement on cutting its fiscal deficit next week prompted some traders to sell dollars against the euro. But the euro failed to sustain the rally. At 0450 GMT, the euro was at $1.3478 from $1.3456 late Thursday in New York, according to EBS. It was at Y103.59 from Y103.60.
“Further falls in the euro could be unavoidable,” Hirotsugu Inoue, executive director of foreign exchange at UBS in Tokyo. “I wouldn’t be surprised if it falls to $1.300 in the next week or so,” he added.
At an auction to sell EUR3.563 billion of 10-year bonds Thursday, Spain was forced to pay an average yield of 6.975%–just below the 7% level at which Greece, Portugal and Ireland were forced to seek bailouts. France also issued a series of medium-term bonds, including EUR3.33 billion in July 2016 debt at 2.82%, up from 2.31% at the previous auction.
Continue reading »
November 16th, 2011
The euro fell to fresh one-month lows against the dollar and yen on Wednesday in Asia as worsening European bond market conditions weighed on investor sentiment toward the region’s debt problems and the single currency.
The euro fell to its lowest level since Oct. 10 at $1.3437 and Y103.59 earlier in the day. Tokyo traders said some short-term-focused investors executed automated stop-loss selling orders around $1.3500, triggering the broad euro sell-off.
Traders pointed out the worsening outlook for the European debt problem, which has been pushing up European sovereign bond yields recently.
Triple-A rated French and Austrian bond yields are gaining, and traders pointed to that as strong evidence of how serious the debt problem is.
“Judging from recent European bond market conditions, the euro has a high-risk of a near-term plunge,” said Hiroshi Maeba, a senior dealer at Nomura Securities.
With such pessimism spreading, some Tokyo options traders bought two-week euro-put contracts with Y101.50 strike, a bet that the European unit may fall below the strike price within the next couple of weeks.
Continue reading »