Intraday Market Thoughts

EUR Drifts off Highs on Greek Focus, RBA Minutes Next

by Adam Button
Jun 20, 2011 23:25

All eyes remain on Greece in the forex market; overall moves were small Monday as the market prepares for a razor-thin confidence vote on Tuesday. The RBA minutes are a highlight of the Asia-Pacific session.

Sentiment was generally positive Monday after Fin Min Schauble said Germany was prepared to increase the EFSF to 440B and debt guarantees to 780B.

S&P 500 gained 05% to 1278. It was the third consecutive day of gains following the large decline on Wednesday. Stocks breached Fridays high but were unable to close above that 1280 level. The EUR/USD chart is similar but unable to break Fridays intraday high of 1.4339. Look for these two charts to confirm each other in the day ahead.

The market is looking toward a confidence vote in Greeces parliament on Tuesday night. PM Papandreou has 155 of 300 seats. A FAILURE OR DELAY WOULD BE A LARGE EUR NEGATIVE but if not this may be the final hurdle for the Greek situation to return to some stability (EUR positive). Ashraf has so far called the EUR rally beautifully, establishing longs around 1.41. For targets and trades, see:

Asia-Pacific Preview

The RBA releases the minutes of the June 7 decision at 0130 GMT. The Aussie dollar fell sharply after the decision, which maintained rates at 4.75% and said the current mildly restrictive stance of monetary policy remained appropriate. AUD later rebounded on June 15 when Stevens said rates will need to rise at some point. Very little tightening is priced in for the year ahead so there is a better scope for an AUD rally here. Unfortunately, the RBA are some of the most opaque among large central banks so there may be little to digest here.

At 0430, Japan releases the all industry activity index for April. It is expected to rise 1.8% m/m after a quake-driven 6.3% decline in March. The Japanese government upgraded its economic assessment on Monday, noting signs of an improvement in production capacity. This data captures a time period that was weak and even if the data falls short of expectations, look for market moves to be quickly reversed as the market is looking ahead.


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