Asian session – Fears of civil war in Libya undermine risk appetite
Reports out of Libya suggesting the country may be edging closer to a civil war boosted nymex oil prices above $105/bbl. In Saudi Arabia, tensions were also running high. Amid this scenario, investors flocked out to the Japanese Yen and the Dollar, but overall the movements lacked any momentum.
EUR/USD was marginally lower around 1.3975, USD/JPY came into close contact with 82.00. AUD/USD was also taken lower to 1.0115. New Irish government vowed to seek EU/IMF renegotiation. Australian new job ads +1.2% MoM. Japanese PM under strong political pressure. Silver and gold made new highs. Regional bourses fell sharply, Nikkei down 2%.
European session – A soft Dollar to start the week
The Dollar extended losses against peers, falling to new lows against the Euro at 1.4033, while testing its recent monthly bottom vs the Pound at 1.6340. USD/JPY fell to 81.95, AUD/USD erased losses from Asia to regain 1.0150. USD/CHF was unchanged around 0.9250.
Moody’s downgraded Greece, to B1 from Ba1, negative outlook. The Greek FinMin felt the downgrade totally unjustified. Euro zone sentix index rose to 17.1 in March from 16.7 in February. Regional stockmarket lower, FTSE down -0.28%.
American session – Dollar recovers despite surging oil prices
The US Dollar enjoyed a healthy recovery as stocks slipped down, tracking losses from Europe. By session end, a strong bounce in equities appeased the early sell-off. GBP/USD never found momentum to make new highs, resulting on a sharp fall in the British Pound, from highs at 1.6340 to make new weekly lows under 1.6200. Against the Euro, the revived Dollar managed to pare losses, ending at 1.3970. AUD/USD was easier too, finishing just above 1.0100, USD/JPY regained 82.20 area.
Fed’s Fisher commented that he will vote to curtail or end QE2 if it proves counter-productive. Portuguese yields were taken to new psot-Euro life-time highs, while Greek credit default swaps were also at record highs of 1036 bp. US DefSec was seen quotig that any US military action in Libya should have international support. Bloomberg was carrying a story saying China may hike reserve ratios again shortly.