US Dollar in retreat as investors show a bias towards risk appetite; EUR-USD stabilises but the day is not yet over

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Published on Friday, 22 June 2012 13:35

Written by Will Peters

"But the day ahead holds a bit more potential to liven up the FX space, mostly from further Eurozone headline flow" - Shaun Osborne at TD Securities.

The US dollar (Currency:USD) has stabilised on global FX markets this today, this following  a 1.3 pct drop recorded yesterday.

The euro dollar exchange rate has moved back into the mid-1.25s. (Please see the latest FX forecast updates on our IMT site, access Free via this Facebook gateway).

The pound dollar exchange rate, on the other hand, has advanced and is 0.11 pct up on Thursday, GBP-USD is at 1.5611.



"Markets are relatively quiet leading into today’s open, with a bias towards risk appetite. China is on holiday, while there was only a minor reaction to Moody’s significant downgrades of banks with global capital markets exposure after the market had digested the rumours of it all day. German IFO was mixed, but highlights a business climate that is fading," says Camilla Sutton at Scotiabank.

That said, there is scope for further FX action, as Shaun Osborne at TD Securities notes:

"But the day ahead holds a bit more potential to liven up the FX space, mostly from further Eurozone headline flow. Following up on yesterday’s Eurogroup talks, we have the EU Finance Ministers meeting as well as a summit of leaders from France, Germany, Italy, and Spain – beginning at 8:00AM ET.

"Today’s meetings should help frame the discussions (and market expectations) heading into the more important EU leaders’ summit at the end of next week. With the still nervous and highly reactionary market environment we are in, headlines should continue to be the focus for now."

There have not been any major headlines from the ECOFIN meetings, while this weekend the BIS will host its global central banking meetings. There is no US data today, likely allowing markets a day of rest.

Leading into the North American open, NOK, SEK, CAD, NZD are outperforming, up between 0.2 and 0.3%; while GBP and EUR are up 0.1% and JPY is flat