Germany Proving To Be The Last Hurdle In Greek Bailout Plans

Daily Forex Fundamentals | Written by AC-Markets | Apr 27 10 06:11 GMT |

Market Brief EURJPY weakened 0.2% to 125.51 as the JPY rose against all of its major counterparts and Asian stocks declined as concern about Greece's bailout plan and the effect of tightening measures in China drove investors away from higher-yielding assets and after reports that BOJ may upgrade its 2011 CPI forecast on April 30. Investor sentiment turned bearish after German Chancellor Angela Merkel said she won't release funds for Greece until the nation has a 'sustainable' plan to reduce its deficit. The USDJPY traded near its strongest level in almost three weeks to 93.81, the most since April 6 on speculation the Fed is moving closer to withdrawing stimulus as the US economic recovery gathers momentum. After the market closed, US Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation, saying they want to force changes before beginning full debate. The NZDJPY fell to 67.53 after trading 68.31, the highest since Jan. 14 and AUDJPY fell to 86.76 after touching 87.77 yesterday, the strongest since Sept. 29, 2008 on concerns the EU aid package for Greece won't keep the deficit crisis from spreading, damping demand for higher-yielding currencies. The AUDJPY also retreated from an 18 month high as Asian stocks dropped. The NZDUSD dropped to 0.7201 after it reached 0.7256, the most since Jan. 20 while AUDUSD traded 0.9251 after German Chancellor Angela Merkel yesterday said she won't release Greek rescue funds until the country shows it's got a 'sustainable, credible' plan to cut its budget deficit. Australia's producer prices index gained 1% in Q1 (prev. -0.4%) as cost of petroleum refining advanced 8.1%, building construction prices gained 0.6% while utilities rose 3.3%. The EURUSD may weaken to less than 1.3000 this year should the Fed start raising interest rates before the ECB, according to market estimates. If the Fed does hike before the ECB, BOJ and BOE, the USD could become a growth currency again rather than a safe haven suggesting EURUSD and GBPUSD remain at risk in 2010 of falling well below estimated targets of 1.3000 and 1.4800. The FOMC will probably hold its target rate at a range of zero to 0.25% on April 28. USDKRW strengthened 0.5% to 1,103.80 to a 19-month high before a report forecast to show the nation's GDP expanded 7.5% in Q1 annualized, the most since Q4 2002. Yuan forwards climbed 0.1% to 6.6065, reflecting speculation that China's currency will strengthen 3.3% and it's expected that the government will allow it to gain this year with a 5% revaluation narrowing the US trade deficit with China by $61 billion. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.