EURO 1.3270 The Euro had rallied today to as high as 1.3277 on the increased expectation of the take up of the PSI debt swap exceeding the magic 75% figure, which would allow Greece to avoid a default (for now) and thus receive the long awaited bailout package. It appears that the result, which was due to be released about now, will be delayed until 6.00am GMT Friday, so we are going to have to wait a while longer to find out. Given that the result is likely to be an affirmative, it would appear that all the good news on this is now priced into the market and the downside is where the risk lies. Aside from Greece the main news was that the ECB left rates unchanged, as expected, at 1%, but has been talking up the EU outlook, heralding the success of the LTRO and emphasized that there are signs of stabilization in the EU economy although recovery will be slow.
The equity markets all liked it today, with the Dax and CAC both up around 2.5%, while the S+P is currently up 0.9% at 1365.
We now await some important data today. Around lunchtime in Asia, we see a raft of Chinese economic numbers, headed by the CPI and then later on the Non Farm Payrolls and US unemployment.
Technically, we have almost reached the Fibo support-turned-resistance level at 1.3282. The indicators though are suggesting that we could yet move a bit higher. The 4 hour indicators look as though they still have the momentum for the Euro to take a look at the other side of 1.3300, although the hourlies are very overbought and we are not likely to pay a visit up there, if at all, before Europe gets going tomorrow. If we do see 1.3300 or above, it may be a fairly short run thing as the dailies continue to point lower and we may be in for a volatile run. Given that it is Friday and anything could happen over the weekend, I would be keeping it very square before today’s NY close and then taking another look on Monday.
For today, use 1.3235/1.3285 as a guide in Asia. The Chinese data may stir things up a little, but otherwise it should be quiet. A positive announcement regarding Greece, may yet provide a further brief rally, but I would not wish to be caught long above 1.3300
