Underlying unease
Ahead of today's ECB and BoE meetings, and the impending Greek PSI announcement, both investors and traders displayed an understandable reluctance to commit to risk yesterday, although overnight nerves steadied just a little. For example, the single currency is back near 1.32, after lingering threateningly near 1.31 yesterday afternoon. The recovery is partly on the back of positive noises regarding participation in the Greek debt-swap, with the minimum participatory level (below which would mean a disorderly default) apparently set to be reached. Despite the partial overnight recovery, equity markets are on edge too and commodity prices are on the defensive. The gold price for instance has really struggled of late, falling USD 100 since late last month. A sharp decline in both German industrial orders and Spanish industrial production contributed to the underlying tension. Unsurprisingly, high-beta currencies in Asia have been tentative while the yuan has been softening as well.
Also in today's Daily Forex Brief:
- Beyond the Greek PSI
- RBA refuses to countenance Aussie FX intervention
- Reasons to question the ECB
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