Intraday Market Thoughts

Greece Nears New Election, RBA Minutes Upcoming

by Adam Button
May 14, 2012 22:34

Moody;s Downgraded Italian banks, European bond market was in turmoil again on Monday, sending the euro to a four-month low. The pound sterling was the daily top performer while the euro and NZD lagged. The RBA minutes are the highlight of Asia-Pacific trading. Monday nights Intermarket Insights are out, with GBPUSD & EURUSD included.

Bond spreads and credit-default swaps blew out on continued questions about Greece, Spanish banks and the viability of continued austerity. The Spanish bank plans are viewed as inadequate and the Greece is paralyzed. Greeces President held meetings aimed at forming a coalition technocratic government but Syriza senses its chance to seize power and will hold out for fresh elections, which could be called tomorrow.

A Greek exit is looking increasingly likely as ECB members begin shifting their attention to minimizing contagion from such a move. Early in the year, a Greek exit was called absurd by ECB members, now they are saying it is manageable.

The SNBs Jordan spoke but he delivered the same rhetoric that the CHF is massively overvalued and the cap will be defended with utmost determination. The words did not move EUR/CHF a single pip and the pair fell as low as 1.2009.

Late in US trading, Moodys downgraded 26 Italian banks, sending the euro to a fresh low since mid-January.

At 0130 GMT the RBA releases the minutes of the May 1 meeting where officials lowered the cash rate by 50 basis points. Comments about global growth will weigh on AUD and other growth-sensitive currencies. Otherwise the session is quite, Japan sells 40-year bonds at 0345 GMT and at 0500 is the April Japanese consumer confidence report.

Ahead of tonights RBA minutes, 2 ideas on AUDUSD are included in todays Premium Intermarket Insights. Direct Access is found here: Nonsubscribers can click here



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