The euro commenced the week with the apparent selling pressure witnessed in Friday still around. Yields have been rising again recently, and investors need to reevaluate any optimistic scenarios they had drawn out. A main point of discussion is the effectiveness of the two long term refinancing operations (LTRO) by the European Central Bank (ECB). While the LTRO injections did help support banks that were in possession of sovereign debt, those banks in return did not lend that capital back into the markets, complicating eurozone`s economic troubles. Spain’s bond yields have been rising while Italy, considered a model of reform, faces a 1.5% decline in gross domestic product (GDP), due to austerity. Portugal’s willingness to reform encourages investors, but the figures still do not paint a shiny picture. Last but not least, Greece faces colossal and exceedingly complicated problems –socially, politically and economically - with market participants anticipating yet another round of restructuring that could be a rerun of the drama surrounding the last restructuring.
The US dollar appears strong as the markets open following the weekend break and risk aversion is still on the table. Markets are bracing for a worsening eurozone crisis and the greenback is heavily favored. The US labor market is again in the spotlight as the disappointing Non-Farm payrolls two weeks ago, were matched by a worst than expected Unemployment Claims last week.
Oil opened lower at 102.11 dollars a barrel from 102.84. Gold opened at 1658.06 US dollars an ounce from 1658.18. Against the euro, gold rose to 1269.09 from 1268.02 an ounce. Silver opened at 31.4505 dollars an ounce from 31.4003.
|.||EURUSD||1.3090||SHORT @ 1.3080||67% of deals buy EUR|
|.||USDJPY||81.20||SHORT @ 82.20||65% of deals buy USD|
|.||GBPUSD||1.5880||SHORT @ 1.5870||54% of deals buy GBP|
|.||AUDUSD||1.0385||SHORT @ 1.0385||59% of deals buy AUD|
|.||GOLD||1643||LONG @ 1643||72% of deals buy GOLD|
|.||OIL||101.00||LONG @ 101.00||77% of deals buy OIL|
|.||EUR||12:00||Trade Balance for February||1.5 bil|
|.||USD||12:30||Retail Sales m/m for March||0.4 %|
The US dollar (USD) broke through previous resistances against the Mexican peso (MXN) recording a 3-month high at 13.20195. The pair appreciated by 1790 pips, a weekly return of 1.4%. Friday’s close was at 13.17120 which appears to be the new resistance level. It will be interesting to see whether past week’s trend will continue.