Daily Forex Review: Portugal Debt Woes Weigh on EUR – July 11, 2014

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Daily Forex Review: Portugal Debt Woes Weigh on EUR - July 11, 2014

The US dollar took advantage of the run in risk aversion during the London and US trading sessions, as debt woes in Portugal sparked a run to forex safe-havens. Data from the US was stronger than expected, as the initial jobless claims and wholesale sales data printed better results. There are no major reports due from the US today, as earnings have been driving dollar price action and risk sentiment so far.

The euro suffered a massive forex selloff in the late London trading hours when Portugal reported a halt in trading of shares of Banco Espirito Santo, due to concerns about its financial standing. Apparently the bank has been unable to make interest payments on its short-term debt securities in time, prompting many to start talking about the euro zone debt crisis that happened nearly half a decade ago and worry about contagion once more. Medium-tier data from the euro zone was also weaker than expected.

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Forex Fundamentals

The pound struggled to hold on to its current forex levels and managed to make small advances to some of its major counterparts. Data from the UK was once again weaker than expected, as the trade balance showed a wider deficit and reflected a drop in exports. The good news though is that domestic demand has been picking up and is reflected in the surge in imports. The BOE decision didn’t contain any surprises as the central bank kept monetary policy unchanged as expected.

The franc also sold off to its counterparts recently as fears of a euro zone debt problem popped up. There were no reports released from Switzerland but the weaker than expected data from the euro zone also weighed on the Swiss currency. There are no reports due from Switzerland today so the franc might be vulnerable to euro movement once more.

The yen was able to benefit a bit from the run in risk aversion, although the currency was weaker during the Asian session as data from Japan reflected weakness. Core machinery orders and tertiary industry activity printed bleak figures. There are no reports due from Japan today, which might still leave the yen supported by risk aversion.

The comdolls had trouble sustaining their gains in recent trading when risk aversion swept over the financial markets. Data from Australia was mixed while China released a bleak trade balance, worsening the cautiousness felt across the markets. Canadian jobs data is due today and strong figures could help boost the Loonie while weak data could lead to a sharper drop.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.