The euro lost ground against the greenback after Federal Reserve Chairman Ben Bernanke disappointed investors looking for a clear signal of further U.S. monetary stimulus.
Big move during the last was a result of expectations for another round of quantitative easing but what Mr. Bernanke said yesterday was probably not what the markets had hoped for.
Chairman Bernanke said “The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely. As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate”.
Meanwhile, Spain managed to raise more than €2 billion at a bond auction, tempering fears it is being cut off from financial markets, although it had to pay a heavy price to borrow the funds.
Spanish 10-year yields climbed to 6.04%. Fears about the eurozone intensified after Fitch Ratings downgraded Spain’s long-term credit rating from A to BBB.
Fitch said “Factors precipitating the downgrade include the high fiscal cost of restructuring and recapitalizing the Spanish banking sector, and the likelihood that Spain will remain in recession through 2013. The Negative Outlook on Spain’s sovereign ratings indicates a heightened risk of further downgrades and primarily reflects the risks associated with a further worsening of the eurozone crisis” in its statement.
The Asian stock markets were mixed today. NIKKEI started the day at 8,609.78, previous close was 8,639.72. HANG SENG opened at 18,797.94, previous close was 18,678.29. Senior managing director at Chibagin Asset Management, Fujio Ando said “Investors have pared their losses in the rebound, but there’s not enough motivation to sustain a real rally, so the market is correcting”.
EUR/USD is trading at 1.2483 by the time of typing and for today resistances are located at 1.2553 and 1.2592. Support levels are 1.2441 and 1.2370.
GBP/USD is at 1.5453. Resistance levels are located at 1.5504 and 1.5580. Supports are located at 1.5409 and 1.5333.
USD/CHF is trading at 0.9619 by the time of typing and for today resistances are located at 0.9650 and 0.9704. Support levels are 0.9566 and 0.9536.
AUD/USD is trading at 0.9848. Resistances are located at 0.9898 and 0.9960. Support levels are 0.9796 and 0.9734.
The economic calendar is light but these events may have high impact on the market.
UK PPI Input data and Consumer Inflation Expectations report will be released at 09:30 GMT. Statistics Canada will release Employment Change and Trade Balance figures at 13:30 GMT.
US Trade Balance report will be released at 13:30 GMT.