FX:Euro declines for the second consecutive day on risk aversion
High yielding currencies for the second consecutive day continue the downside movements as Greek politicians are still unable to find common grounds to form the new coalition government, with new jitters pressuring the euro as more and more Greeks are calling for ending the bailout deal with the European Union as they reject further austerity.
Alexis Tsipras, the leader of Greece`s Syriza Party, will join his peers in a meeting today, before creating the coalition government; however, tension remains evident, while fears spread sharply as the leader is expected to demand Samaras and Venizelos, the former Greek finance minister, to revoke their pledges to implement the austerity measures associated with the second bailout deal.
High yielding currencies are weak against low yielding currencies, where we can see the Japanese Yen gained strength against the Sterling pound and the European common currencies in addition to the appreciation against the other low yielding U.S. dollar.
The U.S. dollar gained strength as well, where the greenback advanced against other majors as more and more investors hold the U.S. dollar and the Japanese Yen in order to protect their wealth against any surprises or shocks from the debt-burden Greece.
The U.S. dollar index (USDIX) , which tracks the dollar`s movement against other majors, rebounded today reaching a high of 80.03 after the opening level of 79.84, noting that the index trades currently around 79.97 and recorded a low of 79.74 earlier today.
The GBP/JPY pair declined as well as more investors are holding the low yielding yen, where the pair after starting the session at 129.03, declined to a low of 128.22, and is currently trading around 128.19.
As for the EUR/JPY , the pair slumped today on fears Greece might exit the euro, ruining all the efforts made previously by the European Union to calm jitters and debt woes. The pair started the session at 103.86 and recorded the lowest at 103.25 and is currently hovering around 103.35.
The flow of upbeat data from Germany and France wasn’t sufficient to support the euro, were the currency remained biased to the downside despite the unexpected improvement in the German trade surplus and the narrowing trade deficit in France.
The EUR/USD pair opened the session at 1.3003 and recorded so far the highest at $1.3006 and the lowest at $1.2965 and is hovering at the moment around 1.2974, slightly below the psychological level of 1.3000.
In general, we expect the downside bias to continue today as market are still tracking the developments in Greece, awaiting the reaction of European leaders as Greece might take the worst step towards rejecting the bailout and exiting the euro, which surely will be a disaster for the euro and markets in general.
