Commentary from Boris Schlossberg, Director of Research, GFT

Risk FX Consolidates in Quiet Trade

Wed, 16 May 2012 23:21:55 PDT

A very quiet night of trade in the currency market due to Ascension day holiday in Continental Europe with EUR/USD consolidating its recent losses while cable saw more selling pressure on some dovish comments by David Cameron. With no economic data in European session currencies marked time after seeing a small rally in risk during Asian trade in the wake better than expected Japanese GDP numbers.

Is EUR/USD Prime For Short Covering Rally?

Tue, 15 May 2012 23:01:56 PDT

The selloff in risk FX continued in overnight European trade with EUR/USD plumbing fresh lows below the 1.2700 figure while cable dropped through the 1.5900 barrier in the wake of a dovish BOE inflation report. In Europe, authorities continued to navigate the Greek crisis with German Chancellor Angela Merkel reaffirming her support for Greece to remain within the monetary union, but fears of a run on Greek banks kept markets on the edge and the pair remained under pressure for most of the night after making several weak attempts at a rebound.

UK Labor Markets Resilient

Tue, 15 May 2012 21:59:21 PDT

UK unemployment surprised to the upside with claimant count dropping by -13,700 versus forecasts of 4,900 gain. The unemployment rate dropped to 8.2% from 8.3% the month prior. This was the fastest pace of job growth in nine months indicating that UK labor markets remain relatively buoyant despite broader economic slowdown in UK.

Slight Recovery in Risk FX ahead of US Open

Mon, 14 May 2012 23:41:28 PDT

Risk FX was mildly firmer in overnight European trade today boosted by better than expected GDP data from Germany although investor sentiment in the region deteriorated. German Q1 GDP surprised to the upside printing at 0.5% versus 0.1% eyed as it helped ot lift EUR/USD above the 1.2850 level in early morning European trade. In calendar-adjusted terms, economic activity was up 1.2% on the year. In non-adjusted terms, GDP growth came to +1.7% y/y.

German GDP Surprises to Upside

Mon, 14 May 2012 19:25:31 PDT

German Q1 GDP surprised to the upside printing at 0.5% versus 0.1% eyed as it helped ot lift EUR/USD above the 1.2850 level in early morning European trade. In calendar-adjusted terms, economic activity was up 1.2% on the year. In non-adjusted terms, GDP growth came to +1.7% y/y.

Aussie Sets Fresh Yearly Lows as Risk Selloff Continues

Sun, 13 May 2012 22:09:16 PDT

Risk FX currencies opened lower and continued to tumble at the start of week’s trade today as concerns over the prospect of Greek exit from the Eurozone mounted. Greek politicians were unable to come to terms over the weekend to form a workable coalition government with far left leader Alexis Tsiparas of the Syriza party pulling out of the talks over the critical issue of adherence to the bailout agreement. Mr. Tsiparas stated that "As long as they insist on the bailout, to a policy that the people have rejected, they cannot ensure social stability."

Euro, Aussie Fall Through Key Levels at Start of Week's Trade

Sun, 13 May 2012 20:23:57 PDT

Risk currencies opened lower in Asian session trade as concerns over possible exit of Greece intensified over the weekend. Greek politicians were unable to reach a deal to form a workable coalition government with far left leader Alexis Tsiparas of the Syriza party pulling out of the talks over the critical issue of adherence to the bailout agreement. Mr. Tsiparas stated that "As long as they insist on the bailout, to a policy that the people have rejected, they cannot ensure social stability."

Hopes of Greek Government Spur Short Covering Rally in Euro

Thu, 10 May 2012 22:33:24 PDT

After plumbing fresh lows in Asian session trade risk FX bounced in midmorning European dealing on speculation that Greece may cobble together a working coalition government without resorting to another Parliamentary election. Earlier in the session weak Chinese economic data and a massive unexpected loss from JP Morgan kept risk FX under pressure with EUR/USD coming within a few points of the 1.2900 barrier while Aussie drifted lower towards parity. JP Morgan reported a trading loss of more than -2 Billion dollars in credit derivatives as a result of hedge gone wrong by its CIO office in London.

Risk FX Under Stress as Chinese Growth Slows

Thu, 10 May 2012 20:48:50 PDT

Weak Chinese economic data and a massive unexpected loss from JP Morgan kept risk FX under pressure in Asian and early European trade with EUR/USD coming within a few points of the 1.2900 barrier while Aussie drifted lower towards parity. JP Morgan reported a trading loss of more than -2 Billion dollars in credit derivatives as a result of hedge gone wrong by its CIO office in London.

Euro Steadies But Concern Persists

Wed, 09 May 2012 22:33:41 PDT

A quiet night of consolidation in the currency market today with EUR/USD steady at 1.2950 level as markets continue to wait for resolution of the Greek parliamentary elections. Euro zone governments kept Greece afloat on Wednesday after agreeing to a payment of 5.2 billion euros from the region's bailout fund. The EFSF agreed to make the scheduled payment, which will allow Greece to meet near-term bond redemptions and other obligations and the news of that announcement has helped to stabilize the selloff in the euro for the time being.