FX: Euro Slips In Risk-Aversion Trade; Dollar, Yen Firmer
LONDON, Feb. 25 (MNI) - Comments from ratings agencies about Greek debt prompted risk-aversion trade through European morning dealing Thursday, with yen the main beneficiary, closely followed by the dollar. Sovereign demand in euro-dollar provided a cushion, keeping the rate buoyed above $1.3450, while Far East demand for yen pairs soaked up supply and kept dollar-yen and euro-yen above key support levels at Y89.20 and Y120.00.
EURO SUMMARY: Opened in early Europe around $1.3548
mark session highs at $1.3548, as rate reacted to early demand for euro-yen. Rate reversed off highs as risk positions were pared, the Asian market reacting to eurozone negative articles in the UK and US press. Rate eased toward $1.3500, and with no apparent Asian sovereign demand here allowed rate to break below and move to $1.3470 as stops through $1.3495 were triggered. Rate squeezed to lows of $1.3451, as downside stops were triggered in euro-yen, recovering to settle between $1.3455/70 ahead of the European open. Early buys in Europe lifted the rate to $1.3498, several sovereign names noted buying, but offers placed toward $1.3500 capped and allowed rate to slip back to $1.3470. Mid-east demand noted through the morning cushioned the easing, then took rate back toward $1.3500, lifting through on larger Asian sovereign buying which took it on to $1.3518. Upside momentum quickly faded, with rate drifting back to $1.3500.
EUROZONE: Reported comments from eurozone officials Thursday, * GERMANY ECONMIN: Upswing not yet self sustaining - No broad credit crunch in Germany - but problems in some business sectors - See GDP back on level of 2008 in 2-3 years * GERMANY: The economic panel of the German Banking Association (BDB) on Thursday forecast German GDP growth of 1.5% both in 2010 and 2011. On the back of a recovering global economy, the chief economists of the country's top private banks "see good chances that the [German upswing will become this year and especially next year self-sustaining, even though momentum will remain moderate." * GREECE/MOODY'S: Speaking in Tokyo, Moody's head of sovereign debt said Greek fiscal position is unchanged, although the agency is looking for fresh data. However, he said there is no sign Europe is unwilling to help Greece. Cailleteau, Moody's sov debt head, said Moody's may cut Greece if it deviates significantly from plan, maybe up to a couple of notches. He added the downgrade could come in a couple of months if govt deviates. He added that Moody's may stabilize the A2 rating if fiscal plan followed (Bbg). * ECB STARK: fiscal authorities should start to withdraw stimulus to safeguard public solvency in the medium term. - IMF's proposal for central banks to allow higher inflation 'most unhelpful' - No evidence that inflation target of 4% would enhance economic growth * FITCH/GREECE: Fitch analyst tells wires they expect to keep Greek ratings unchanged for a few months, unless something unexpected happens. However, adds keeping a negative outlook on Greece, and does not expect that to change for some time. Fitch add a Greek ratings cut in coming months is possible, but wouldn't say it was likely. They say there is no date for a Greek rating decision, watching things on a daily, weekly basis.
EUROZONE: Press pick-ups concerning the eurozone Thursday, * UK PRESS: The UK's Telegraph says Greece has greatly damaged its chances of an EU bail-out after lashing out at Germany over war-time atrocities and accusing Italy of cooking its books to hide public debt.
EUROZONE: Releases in the eurozone Thursday, * EU Comm: Leaves EMU 2010 GDP fcst unchanged at +0.7% y/y - Leaves EMU 2010 HICP fcst unchanged at +1.1% y/y - Leaves Germany 2010 y/y GDP fcst unchanged at +1.2% - Leaves France 2010 y/y GDP fcst unchanged at +1.2% - Leaves Italy 2010 y/y GDP fcst unchanged at +0.7% - Revises Spain 2010 y/y GDP fcst to -0.6% vs -0.8% - Revises UK 2010 y/y GDP fcst to +0.6% vs +0.9% - Revises Germany 2010 y/y HICP fcst to +0.7% vs +0.8% - Rvises France 2010 y/y HICP fcst to +1.2% vs +1.1% - Revises Italy 2010 y/y HICP fcst to +1.7% vs +1.8% - Revises Spain 2010 y/y HICP fcst to +1.1% vs +0.8% - Revises UK 2010 y/y HICP to +2.4% vs +1.4% - Revises EMU Q1 2010 GDP fcst to +0.2% VS +0.1% - Revises EMU Q2 2010 GDP fcst to +0.2% vs +0.1% - Leaves EMU Q3 2010 GDP fcst unchanged at +0.2% - Leaves EMU Q4 2010 GDP fcst unchanged at +0.3%
EUROZONE: Data released in the eurozone Thursday, * ECB: EMU Jan sa M3 growth -0.1% y/y; MNI median flat y/y - EMU Jan sa private loan growth -0.6% y/y; MNI median -0.1% * EMU: Feb business climate index rises to -0.98 vs Jan -1.13 - Feb economic sentiment index down to 95.9; Jan rev 96.0 (95.7) * GERMANY: Feb sa unemployment +7k m/m (MNI median +14.5k) - Feb sa unemployment rate 8.2% (MNI median 8.2%) * GERMANY: Jan ILO sa unemployed 3.22mln; -10k m/m - Jan ILO sa unemployment rate 7.5%; Dec 7.6% * GERMANY: Dec real sa construction orders +5.9% m/m, +8.2% y/y * FRANCE: Jan PPI +0.7% m/m, +0.4% y/y; Dec +0.1% m/m, -2.9% y/y - Above expected; MNI analysts survey median forecast +0.2% m/m * FRANCE: Feb consumer morale down 3 pts to -33; JAN rev -30 (-29) - Below expected; MNI analysts survey median -28 * ITALY: Feb sa mfg morale gains 0.8 pt to 20-month high of 84.0 - Above most forecasts; MNI analysts survey median was 83.6 - Most key components recover, especially foreign orders and near-term production prospects. * SPAIN: Spain Jan producer prices +1.0% m/m, +0.9% y/y;Dec +0.4% y/y
YEN SUMMARY: Opened in early Europe around Y89.48 and Y120.57
daily Ichimoku cloud line support at Y89.29, a daily close below this level adds to the negative tone for the pair. Despite the break below this line there have been reports of bids from Japanese names supporting the pair. The cross-yen has also been under fire this morning as euro-yen approaches Y120.00, the low so far is Y120.24, traders report good size option barrier at Y120.00. This is expected to be protected, however they go on to say a break of this level sees very large stop loss orders, which if triggered expect a very sharp move lower. Sterling-yen has also been sold off this morning, moving from Y139.23 to a low of Y136.30. The problems in Greece and talk of Gilt maturities over the next 2 days (said to worth $4 billion) all adding to sterling's woes.
JAPAN: Reported comments from Japanese officials, agencies Thursday, * JAPAN/MOODY'S: Moody's also commenting on Japan, say needs to see more clear cut fiscal policies in Japan, but says doesn't think Japan will suffer a sudden shift in sentiment like Greece. However, adds that pressure could come on Japan rating if economy underperforms or fiscal plans are unconvincing.
JAPAN: Data released in Japan Thursday, * Capital flows for the week ended Feb. 20 - Ministry of Finance: * Japanese investors: Sold net Y27.9 bln in foreign equities - Bought net Y348.0 bln in foreign bonds - Bought net Y67.8 bln in foreign money market instruments - Resulting in a net purchase of Y387.9 bln. * Foreign investors: Bought net Y37.2 bln in Japanese equities - Bought net Y310.5 bln in Japanese bonds - Bought net Y543.1 bln in Japanese money market instruments - Resulting in a net purchase of Y890.8 bln.
