Forex: Monday's review
The euro touched its lowest level since 2001 against the yen as speculation German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the 17-nation currency.
The yen advanced against all its most-traded counterparts as demand for refuge increased and as the Swiss National Bank- imposed ceiling on the franc leaves Japan’s currency as one of the few haven assets.
The euro weakened earlier to the lowest level versus the greenback since February after bets increased the European Central Bank may have to ease monetary policy to shore up the economy.
The yield on German bunds, Europe’s benchmark government debt securities, fell to a record 1.71 percent, while rates on Greek securities reached a record high and Italian and Spanish yields rose.
Merkel’s government is debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three officials said Sept. 9.
Germany will decide on a course of action after receiving the results of a Greek progress report, a government spokesman said, speaking on the customary condition of anonymity.
BNP Paribas SA, Societe Generale and Credit Agricole SA, France’s largest banks by market value, led European equity declines after two people with knowledge of the matter said Moody’s Investors Service may cut their credit ratings as soon as this week because of their Greek holdings.
EUR/USD: the pair showed low slightly below $1.3500, then restored and finished session in area of $1.3660.
GBP/USD: the pair holds at $1.5770-$ 1.5890.
USD/JPY: the pair showed low on Y76.70, then grown and finished session above Y77.00.IEA monthly oil market report is due, at 0800GMT.
UK data at 0830GMT includes inflation and trade data as well as CLG House Prices. Consumer Price Inflation is expected to show price increases persisting at well over double the 2% official target. The BoE has said it expects CPI to approach a 5% annual rate once rising utility bills take their toll but that is not expected to be seen until the September data are released next month. Median forecasts for Tuesday look for CPI to come in at 0.6% m/m, 4.5% y/y with core-CPI at 0.6% m/m, 3.1% y/y. Trade is due out the same day and could well reflect the clear drop off in demand and orders from overseas seen in the recent Markit/CIPS PMI survey of the sector.
US data starts at 1230GMT with the Import/Export Price Index. Increases in import prices may be moderate due to only a small change in petroleum costs, and smaller increases in items like foods and motor vehicles. Export prices should benefit from favorable exchange rates and demand for agricultural products.The two earliest monthly indexes for consumer confidence include the IBD/TIPP Economic Optimism Index for September at 1400GMT and could provide a strong hint about the direction of the preliminary Reuters/University of Michigan Consumer Sentiment Index on Friday. Finally, at 1800GMT, the US Treasury is expected to post a $130.0 bn budget gap in August.