The EUR USD settled into a range after gapping open and pulling back from its high throughout the New York session, as traders awaited more details about the Greece bailout package. In addition, traders are waiting for Tuesday’s Greek Treasury bill auction. Investors want to see whether there is strong demand for short-term Greek debt or if it is going to have to borrow to keep up with its financial obligations.
The commodity and equity markets gave mixed signals today. Initially, both asset classes rallied as the Euro broke out to the upside. Some traders felt that this new agreement eliminated concerns about Greece’s ability to meet its short-term obligations. Some even felt that the funding was enough to ensure that Greece would have enough liquidity to implement its new austere financial measures.
The GBP USD gave back all of its overnight gains and posted a daily closing price reversal top. The British Pound piggy-backed the Euro’s rally but turned negative when it broke off its high. The charts indicate a break back to 1.5297 is likely over the near-term.
After a sharp sell-off overnight, the USD CHF settled into a range at 1.0670 to 1.0568. This market mirrored the movement in the Euro throughout the day. A strong Euro will continue to drive the Dollar/Swiss lower.
Mixed equity markets triggered a so-so trade in the USD JPY. Stronger equity markets will increase demand for higher risk assets which will put pressure on the Japanese Yen. Otherwise continue to look for the Dollar/Yen to drift sideways over the near-term.
The USD CAD traded flat most of the New York session. The lack of direction in gold and crude oil contributed to trader indecisiveness. Technically, this market is oversold and getting support from the confirmed reversal bottom at .9975. A break in gold and crude oil will likely drive this market higher to the 50% level at 1.0138.
A worse than expected housing market outlook put pressure on the AUD USD. Overnight this pair rallied sharply higher on increased demand for higher risk assets. After the bearish report, the Aussie sold off, helping to a closing price reversal top.
A similar pattern developed in the NZD USD as traders sold this market in reaction to the move in the Australian Dollar. The close under the 50% level at .7124 indicates further downside pressure should be anticipated.
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