Euro dollar exchange rate tests support and consolidates, but wise to remain prudent in the near-term
- Category: US Dollar Exchange Rate
- Published on Tuesday, 12 June 2012 13:09
- Written by Sam Coventry
"Without some follow through after yesterday’s weak session, the common currency may not find a decent trigger in the coming days to inspire a bigger move in either direction" - Shaun Osborne at TD Securities.
The euro (Currency:EUR) remains highly sensitive to Eurozone newsflow and expectations.
The euro dollar exchange rate is 0.08 pct higher, EUR-USD is at 12491 at 14:00 in London. (We have recently updated our FX forecast section on our IMT site - access is Free via this Facebook entrance path).
The euro pound exchange rate is 0.2 pct lower at 0.8044.
"Every headline is about Europe and the uncertain‐ ties over the Spanish banking sector aid, however with almost no global tier‐1 data released, markets favour risk on as they cling to the hope of further stimulus. OPEC meetings kick off today and Europe is likely to remain in the headlines," says Camilla Sutton at Scotiabank in a morning note to clients.
There has been limited data, with most of the focus on the bond markets.
Greece 10‐year yields have jumped up 74bpts to 28.06%, while all the other yields, safe‐haven and not, are higher as well. The rally from the Spanish banking recapitalisation is fraught with unanswered questions; markets do not like uncertainty, weighing heavily on the outlook.
Commenting on the outlook for the euro, Shaun Osborne at TD Securities warns that the short-term outlook for the euro remains fraught:
"After testing support in the 1.2450 area, the EUR has consolidated along with its G10 peers. Without some follow through after yesterday’s weak session, the common currency may not find a decent trigger in the coming days to inspire a bigger move in either direction. Nevertheless, it is prudent to remain cautious in the near term, with plenty of headline risk, and ahead of an uncertain outcome from the Greek elections over the weekend."