EUR/USD is sliding as concerns about the ability of euro zone countries to refinance their huge public debt increase each passing day. Today France will add to the brisk start to the 2012 debt auction calendar by selling up to €8 billion of bonds. Analysts say France is seen as having a greater risk of contagion from the eurozone debt crisis than Germany. France was put on review for a possible downgrade by S&P last month.
Chief currency strategist at Forex.com, Brian Dolan said “We are in very risky world right now, and sentiment remains extremely fragile. Euro zone bond s did not benefit from yesterday’s risk-on trade, and yields remain at unnerving levels. The market is prepared for a French downgrade, so a one-notch downgrade would not be disastrous. But if they keep the outlook negative or downgrade the debt by more than one notch that could have a more significant impact”.
Meanwhile, THE Australian dollar continues to trade strongly, reaching all-time highs against the euro currency, as concerns around the eurozone return to the market. Trading director at HIFX, Mike Hollows said “There was a bit of eurphoria at the beginning of the year, but already we’re starting to see some worrying signs coming out of Europe. One of the Italian banks, UniCredit, tried to raise cash, effectively discounting their stock by 43 per cent, and rumors were that they were applying for a loan from the IMF and the EU. These things are destabilizing the markets to a degree”.
Today the Asian stock markets opened slightly lower on concerns that the eurozone sovereign debt crisis would keep the euro under the pressure and hurt Asian exporters. NIKKEI started the day at 8,515.66, previous close was 8,560.11. HANG SENG opened at 18,755.40, previous close was 18,727.31. Senior technical analyst at Mizuho Securities, Yutaka Miura said “The strong yen against the euro is not seen as a temporary, short-term problem and it is pressuring the market. The focus this year is whether Europe’s debt problems will settle and when those problems will begin to impact the United States. There are no other themes this year except Europe. Market participants are watching how much longer the yen will continue to rise against the euro and the dollar”.
EUR/USD is trading at 1.2924 by the time of typing and for today resistances are located at 1.2969 and 1.3043. Support levels are 1.2900 and 1.2867.
GBP/USD is at 1.5606. Resistance levels are located at 1.5662 and 1.5709. Supports are located at 1.5573 and 1.5531.
USD/CHF is trading at 0.9423 by the time of typing and for today resistances are located at 0.9471 and 0.9527. Support levels are 0.9390 and 0.9334.
AUD/USD is trading at 1.0322. Resistances are located at 1.0348 and 1.0393. Support levels are 1.0280 and 1.0220.
The economic calendar is heavy today so being cautious is advised. German Retail Sales data will be released at 07:00 GMT. U.K. Services PMI figures will be released at 09:30 GMT. E.U. Industrial New Orders data will be released at 10:00 GMT. U.S. ADP Non-Farm Employment Change report will be released at 13:15 GMT. U.S. Unemployment Claims is due at 13:30 GMT. Ivey PMI figures and ISM Non-Manufacturing PMI date will be released at 15:00 GMT.