EU Morning Report- Greek exit fears weigh, gold bounces epically
|Written by Easy-Forex|
|Thursday, 24 May 2012 06:28 GMT|
The euro (EUR) dropped to a 22-month low falling to 1.2545 from 1.2686 against the US dollar on a heightened risk aversion in the markets. Concerns that Greece may face a damaging default and a messy exit from the eurozone weighed on the single currency after talks said that Eurogroup was asked to prepare a Greek exit plan. Wednesday’s informal EU summit did little to restore sentiment in the market after it showed no progress on how EU leaders are planning to tackle the eurozone debt crisis but all agreed on the importance that Greece stays in the euro. France pushed a proposal of joint eurozone bonds, which can help with funding difficulties for some heavily-indebted eurozone countries but that policy is rejected by Germany.
The US dollar (USD) strengthened against a basket of currencies as fears of a messy Greek exit from the eurozone spurred a higher demand for the safe haven currency. Versus the safe haven Japanese yen (JPY), the greenback slid to 79.21 from 80.05 after the Bank of Japan kept its monetary policy unchanged. US New Homes Sales figures showed a 3.3% gain in April following the sharp 7.3% decline in March.
The British pound (GBP) slid against the greenback falling to 1.5675 from 1.5767 after retail sales revealed the biggest monthly fall since January 2010. Minutes from the Bank of England policy meeting showed 8-1 split in vote to keep the asset purchasing program on hold. MPC emphasized on how vulnerable the UK economy is to the eurozone deepening debt problems and that further easing may be needed if conditions continue. Eyes turn to today’s second release of the UK Gross Domestic Product figures.
Oil declined to 89.27 dollars a barrel from 91.52. Gold (XAU) plummeted to 1533.48 dollars an ounce from 1564.19 but later it recovered its losses to trade at 1563.63 and against the euro it rose to 1241.08 from 1236.55. Silver (XAG) dropped to 27.10 dollars an ounce from 27.89 and today it recovered its losses to trade at 27.93. Stay in tune throughout the day with foreign exchange bullets!
1 data generated by Trading Central™, 2 data obtained from easy-forex Inside Viewer™
3 at the time of writing