 The day’s big event was the release of Euro-zone bank stress tests, which were set out to gauge whether Europe’s banking sector has sufficient capital, if the economy suffered another more severe shocks than the financial crisis. The results showed 7 banks needed more capital, but questions remain about if the criteria used was too lenient. |
 Coming into this week the talk in currency markets was the Euro-zone bank stress tests and their results. The final tally was one German and one Greek bank failing, as well as 5 banks from Spain. Still, the market may decide that the test was too lenient and question the credibility of the results. The EUR therefore came under pressure in the immediate reaction to the results. |
 The euro and others gained sharply against the dollar Thursday after better-than-expected euro-zone and U.S. economic data boosted investor sentiment toward riskier assets. US equities were higher as US companies releases some strong earnings, which only further propelled currencies like the Aussie and Loonie. |
 The Euro broke a spell of weakness against the Dollar as it found support from better than expected manufacturing and services data in the form of the flash version of purchasing mangers indexes and a reading on industrial new orders. US stocks moved to their highest this week as a collection of companies topped earnings estimates, raised their forecasts or did both. That helped power gains by risk sensitive commodity currencies like the AUD and CAD. |
 The Euro slid overnight after failing to move above the 1.30 level as traders digested reports that German lender Hypo Real Estate would need 2 billion euros in case of adverse circumstances. The BOC meanwhile, lifted rates to 0.75% but did so while painting a gloomier outlook for Canadian growth. US housing starts data came in weaker than expected. |
 The market brushed off a downgrade of Ireland by Moody’s as traders and investors look ahead to the release of Euro-zone bank stress tests. The 1.30 level held as resistance for the EUR/USD pair. The Bank of Canada meanwhile gets ready to raise rates by another quarter point tomorrow. |
 Global equities rallied as early 2nd quarter earnings were better-than-expected and Greece held a well received debt auction. That boosted risk appetite and helped “risk-on” trades as the Euro, Pound, and commodity currencies rallied against the greenback. We also take a look at UK releases and US and Canadian trade data. |
 The Euro and others gained against the US Dollar today as “risk-on” trades performed well. For the Euro, a Greek auction of €1.625 billion in 26-week T-bills was well received, netting a yield of 4.65%. The second factor here was strong performance in European stock markets which carried over into a big jump in US stocks at the NY open. |
 The Dollar strengthened versus its main rivals as investors positioned themselves ahead of US earnings and a Greek bond auction. While the Yen recovered its losses following its Sunday election, the Pound faltered in its attempt to regain its overnight losses as S&P reiterated its negative outlook of the country’s credit rating. The Euro and Canadian Dollar were weaker against the greenback even at the mid-point of NY trading. |
Daily Video Recap: Upbeat Euro-Zone, UK Data Countered By Weak US Reports
Fundamental Updates \ Nick Nasad \ 1:04 PM EDT \ July 27th, 2010A strong UK sales release and upbeat results about Euro-zone lending and money supply led a move in higher yielders and boosted “risk-on” trades. But, a weak US consumer confidence report took some of the momentum out of risk seeking behavior and caused the greenback to recoup some of its earlier losses.