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Yesterday, we saw concerns about a Greece default touching a new level. It is so high that the premium demanded to hold her bonds widened to the most since 1998. Furthermore, the Euro Zone GDP remained stagnant for the fourth quarter. The Euro Zone seems to be in a bad shape.
Let us now take a look at the EUR/USD.
Having tested the support of 1.3285 hours ago, triggering another I LOVE IT WHEN MY CHART WORKS moment, the EUR/USD had since eased off and touched 1.3360. TRIGGERING YET ANOTHER I LOVE IT WHEN MY CHART WORKS moment Do remember that support and resistance lines are never a single pip.
The S&P 500 finally bows down to the global pressure and tests the support of 1180.
Oil too suffers from the global concern and has retreated to $84.
Gold continues to climb. It is currently trading at $1150+. Despite a stronger US Dollar, gold continues to climb. This suggest extra demand and hence risk aversion may be strong. Gold is probably an investment of choice during times of uncertainty.
In the press release following the decision to let the Euro minimum bid rate remain at the record low of 1%, ECB’s Trichet commented that he does not expect Greece to default and he is confident that the country will solve its budget problems. Having said so, we all know that the market probably had enough of words and indeed this comment did not affect the EUR/USD much. Worries are mounting on the possibility of the failure by Greece to raise funds for it’s debt obligations.
In the meanwhile, Greece’s bonds dropped and the yield premium now is at it’s widest since the inception of the Euro currency over German debt. Furthermore, reports indicate that concerns are spilling over and Portugal’s bonds yield premium has increased too.
Over across the Atlantic, FED’s Bernanke mentioned that the US economy continues to face challenges such as unemployment and home foreclosures. An increased in the US Unemployment Claims earlier also came as a shock to many who realized that the recent positivity towards the American economy may be too far fetched. This gave the S&P 500 a rather hard knock.
Later in the day and tomorrow brings us numerous data releases and speeches including both Fed’s Bernanke and ECB’s Trichet. Be careful of unexpected spikes.
Continued bullish pressure may touch 1.3400/455.
A return of bearish momentum may see an attempt to breech 1.3285 again. After which, we shall be opening up the doors to 1.3200.
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