Asian markets were relatively flat today after a lackluster performance in US equities. Greek Prime Minister George Papandreou met with President Obama in Washington yesterday to discuss efforts to fight speculation. Papandreou blames speculators for fueling the fire and accelerating the debt crisis in Greece which has been the center of so much attention. Regardless of who's to blame, the fact remains that the country's debt to GDP ratio soars more that 12%. With the Greek PM explicitly stating that no "bailout" or funds are needed as of yet, the country has another round of debts to pay off early next month. Although last weeks' bond auction was a success, market participants are focused to see how the EU responds to the crisis, and whether the new austerity measures released last week will be enough to pull back the debt laden country from the brink of default.
Euro Uncertainty
The euro was largely unchanged early in London trade today, holding just below the 1.36 handle. The single currency has proven to be quite resilient in light of negative news pouring out of the Eurozone day after day. Attempts to break through the 1.35 handle have failed 6 times in the last month. The euro continues to drift sideways in a narrow range with no clear direction. Although sentiment still remains bearish, the bulls have kept the euro afloat as it ranges between 1.35 and 1.37. Still, with no changes in the fundamentals, traders continue to see the euro lower. Downside momentum will pick up with a break of the 1.35 handle with targets at 1.3450 and 1.3390. Risk limit sits at 1.3660, followed by the key resistance at 1.3750. Here the 61.8% Fibonacci extension taken from the Dec 18th and Nov 25th highs, converges with the upper bound of the downward channel dating back to Dec 3rd. A break of the 1.3830 level would signify a trend reversal for the single currency.
Aussie Inches Up
Advances in the aussie have been short lived due to euro weakness. Gains in the commodity markets have helped keep the bears at bay with gold hovering above $1126 and oil holding above $81. The currency rests just below the 100% Fibonacci extension taken from the Dec 23rd and Feb 5th lows at .9170. Resistance sits at .9210 followed by .9320, and the .94 figure. Support levels appear at .9130 backed by the .91 handle and .9080. A break at .8940 could lead to significant losses with demand holding steady just below the monthly pivot at .8850.
Today's economic calendar is quiet with the US reporting on wholesale inventories. Tomorrow, Japan releases Q4 GDP figures while Canada will report on capacity utilization. Initial jobless claims at 8:30 in New York is expected to fall to 460k from 469k, while continuing claims are seen unchanged. European markets are slightly higher with US equity futures pointing to a relatively flat open.
MG Financial Group
http://www.mgforex.com
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About the Author
Legal disclaimer and risk disclosure
MG Financial Group, or any of its related companies, will not be held responsible for the reliability or accuracy of the information available on this site. The content provided is put forward in good faith and believed to be accurate, however, there are no implicit guarantees of accuracy or timeliness.
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