Analysis prepared by:

Joaquin Monfort
Forex4you analyst

Analysis prepared by:

Arkady Nagiev
Forex4you analyst

Analysis prepared by:

Arkady Nagiev
Forex4you analyst

Analysis prepared by:

Arkady Nagiev
Forex4you analyst

   The dollar ended the day flat against most counterparts: in the morning it fell but then recovered; there was little data from the U.S and volumes remained low as many traders extended their breaks after Monday’s public holiday. Early optimism over the Greek deal led to a continuation in the rally in risky currencies and weakness in the dollar, however it soured after details emerging from confidential documents, belonging to the eurogroup, which revealed immense private cynicism at Greece’s ability to overcome its economic problems and meet its targets. The report cited “prolonged financial support” might be necessary for Greece and that the growth projections used in modelling the bailout of 2.3% in 2014, for example, were unrealistic. U.S equities had a strong day with the Dow Jones reaching 13,000 for the first time since the financial crisis in 2008, as prices reflected the relief felt by many shareholders at the Greek bailout, however, shares also dipped towards the end of the day and ended only slightly higher. The focus for Wednesday’s data will be Home Sales – with a rise expected to support the U.S recovery narrative.

   The euro continued to appreciate on Tuesday after E.U finance ministers finally agreed on the terms for bailing out Greece. The details were as expected, with a 130bn bailout, private sector expected to take  a 53.5% haircut, ECB involvement through interest repatriation and separate escrow account for Greece’s repayments. Initial optimism, however, soon faded after a confidential ‘debt sustainability’ document which had been circulated amongst E.U finance ministers was leaked to the Financial Times. The private dossier gave a much bleaker assessment of Greece’s credit worthiness. It’s projections of a rise in the debt-to-GDP of 160% in 2020 compared starkly to the fall to 120.5% given officially. The report also argued that Greece would continue to rely on aid for several years to come even after the current bailout. The euro stopped rising and seemed to begin topping out as the new info came to light, backing up many cynics’ views and explaining Germany’s previous reluctance to sign. On the data front euro-zone consumer confidence fell to -20.2 versus -20.1 expected. The next major event for the euro will be the ECB’s sale of 3-year LTRO’s at the end of the month, which may help extend the euro’s rebound higher into the 1.30s versus the dollar.  

   The pound ended the day down despite an early rally following stonger data and a boost to risk appetite after the Greek bailout deal was finally agreed in Brussels. Sterling weakened as the day progressed, however, as market participants grew cynical about Greece’s ability to bring down its debts over the long-term and the forecasts used to tailor the deal were criticised for being over-optimistic. In the U.K data released on Tuesday showed a positive fall in public borrowing although the fillip it gave to markets was short-lived. The amount of money financed to the government fell by -16.8bn in January when it had been expected to fall by -24.7bn. New debt taken on by the Government fell by -10.7bn vs -9.1bn expected and 11.1bn previous – showing a net surplus. Whilst the figures were encouraging they still failed to lift sterling very much. Stronger growth will be required to compliment the austerity shown by the public purse if the country is to recover and so far it has been lacking, and the continued expectation of more QE because of slow growth continue to weigh down the pound.

   The yen traded mixed on Tuesday after risk appetite rose strongly  following news of the finalization of the Greek debt deal but then fell as investors continued to have lingering doubts about the sustainability of the agreement. The yen, so sensitive to risk dynamics, weakened initially but then recovered as risk appetite backtracked. The negative affects of recent data which showed the trade deficit growing to 1.48tr yen in January, as well as heightened expectations of further monetary easing seemed to have worn off temporarily as yen pairs plateaued. However, it appears that a multitude of factors are beginning to undermine the currency, including a decline in exports, a ?new reliance on imported fuel post-Fukushima, loose monetary policy and current account surplus erosion. As a result of which the outlook remains unclear for the yen, possibly even bearish, despite ongoing risks in Europe still fuelling safety demand. Meanwhile on the data front the All Industry Activity Index rose by only 1.3% vs the 1.5% expected on Tuesday.

Analysis prepared by:

Joaquin Monfort
Forex4you analyst

Please note that we’ve updated our Mobile Trader application for Android platform.

The following corrections and improvements have been made in Mobile Trader v2.07 for Android:

• Fixed problem with parabolic SAR updates;
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• Last used chart period is saved now;
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• Fixed an issue when all price updates have been added to last bar on the chart;
• News and Mail localization have been corrected;
• Minor bugs fixed.

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Analysis prepared by:

Joaquin Monfort
Forex4you analyst

USD

US stock markets were closed on Monday in observance of President’s Day. Messages that China lowered its reserve requirement ratio for its banks boosted optimism and initiated the dollar’s sell off across the board at the beginning of the session. Later, however, the price retraced to its initial trading ranges and the dollar ended up at the opening prices versus most of its currency competitors. EUR/USD pair appreciated on hopes that the European  leaders will finally reach a deal on the second bail-out for Greece during the meeting in Brussels. US economic calendar was empty yesterday, as for today, we don’t expect a lot of significant indices to come out of the US economy either. Traders will be most likely looking at January Chicago Fed economic activity in the region, expected to improve from 0.17 to 0.22. Greece and its debt problems keeps on being the main catalyst for the trades – positive outcomes from the meeting  will bolster risk appetite.

EUR

Positive market sentiment on Greece bailout hopes supported the euro on the overnight session and the currency appreciated versus the dollar and its other major opponents. Besides market’s being focused on the results from Brussels, where the E.U. finance ministers met to discuss the second bail-out for Greece, trades were also driven by policy easing in China. Nothing significant was released in the euro zone yesterday, the only two indices worth paying attention to were French February consumer confidence and Italy’s industrial orders in December. Both came in better than expected  and didn’t have any negative impact on the euro. Turning to today, traders will be most likely expecting the euro zone consumer confidence results in the month of February – the index is expected to improve from -20.7 to  -20.2. Today’s most important news has been already published – European finance ministers have reached consensus on Greek bailout. However, the market seems rather skeptical to this event and we currently don’t observe any active euro purchases. Seems like investors have already considered the news from Brussels and are now waiting for more significant drivers.

GBP

The British pound strengthened versus the dollar on Monday, bolstered by the news from China on the one hand and by its own housing market statistics on the other. Rightmove reported housing prices suddenly jumped in February, hitting its 10 year maximum and posting + 4.1% m/m, 1.4% y/y versus the previous -0.8% m/m, +0.4% y/y. At the second half of the trading day the pound retraced to its initial positions and closed the session at the opening prices versus the dollar due to the President’s Day and no market participants in the US. Today’s economic calendar will cover public sector net borrowing, which is expected to narrow to -6.4 billion pounds in January after recent increase by 13.7 billion. Public Sector net cash requirement was registered  at 24.7 billion pounds versus the prior +22.9 bn in December. In other words, today’s data looks positive for the sterling. However, taking into account recent GDP decrease, the market will be also concerned about a possible recession of the UK economy.  E.U. recent decision to provide Greece with another bailout may bolster the pound on today’s session, but only a short time.   

JPY

Japanese yen was pressured versus the dollar at the beginning of Monday’s session, but later recouped its losses and closed the trading day at the opening prices. Negative sentiment towards the yen was bolstered by the messages from Standard & Poor’s. The agency confirmed Japan’s “AA-“ sovereign rating, but kept the outlook negative, which, together with yesterday’s record trade deficit figures, weighed on the yen. Then, slack trading activity and not enough active market participants due to President’s Day in the US brought the yen back to its initial positions. All industry activity index is being released today, most likely weaker than expected, at 1.3% m/m in December, while forecasts predicted  1.6% m/m. Earlier figures were at -1.0% m/m.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst

Analysis prepared by:

Arkady Nagiev
Forex4you analyst

Analysis prepared by:

Joaquin Monfort
Forex4you analyst