Intraday Market Thoughts

EURUSD Weaker Despite Greek Deal

by Patrik Urban
Feb 21, 2012 13:24

USD firms across the board all majors in the ongoing session. Main European equities are losing about 0.5% and relative strength losers are NZD and AUD. Euro and other major currencies, except JPY, initially strengthened on news of a Greece deal, but failed to hold onto the gains and currently all trade weaker against the buck. Mondays Premium Intermarket Insights are underway.

Despite the second Greek bailout approval, market sentiment has worsened sending USD higher. With Greece out of the way, at least temporarily, traders are likely to shift their focus to 3 month and 3 year LTRO due on 2/29. ECB president Mario Draghi said that he expects the second LTRO round to produce similar results as the first round in December when it reached EUR 489 bln. EURUSD trades around 1.32 about 85 points below today's high.

Public sector net borrowing reached a surplus of GBP 7.8 bln in January from November's GBP 14 bln deficit. This is the best result since 01/2008 that increases the chance that the actual government borrowing will be less than the target for this financial year. EURGBP fell to 0.8350 from 0.8377.

Spanish auction reached a full take up with lower yields and strong bid to cover ratios as Spain sold EUR 2.5 bln worth of 3 and 6 month bills today. The second 6 month EFSF auction reached EUR 1.99 bln vs. EUR 2 bln target. Yield and cover also improved.

There are no US data releases due during the NY session today.

Canadian data is due at 8:30 am ET and include wholesale data seen lower in December at -0.2% from 0.3% (core sales exp. 0.2% from 0.3%) and wholesales sales that are expected to grow 0.5% in December from November's -0.4%.

February Eurozone consumer confidence due at 10:00 am is anticipated marginally better at -20.1 from -20.7.

GBP volatility could increase at 2:30 pm when BOE deputy governor and MPC member Charles Bean speaks in Glasgow.

Mondays Premium trades are in progress; include EURUSD, USDJPY USDCAD, EURGBP, AUDNZD, gold, oil & ES.

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