The euro is holding steady but at the lower end of recent trading ranges as markets continue to focus on the eurozone debt crisis. Optimism following new PMs in Greece and Italy has been undermined by yesterday’s rise in yields and markets will be on edge ahead of this morning’s release of the eurozone Q3 GDP report. Data released early this morning showed that German GDP grew at an expected rate of 0.5% in Q3, an acceleration from 0.3% in the previous quarter. This morning also sees the release of …

Europe is likely to dominate the headlines once again this week as traders watch political developments in Italy and Greece. The expectation is that national governments will be fully operational in both countries over the coming days so markets will be looking for progress on fiscal initiatives and economic reforms. There are new PMs in place in both countries now, with the Italian lower house of parliament giving its final approval to a package of economic measures over the weekend. Sentiment was also boosted overnight by the news that the …

With the positive impact of the news that Italian PM Silvio Berlusconi is to step aside quickly wearing off, risk aversion spiked higher once again yesterday. A jump in 10-year Italian bond yields well above the 7% level that many consider unsustainable caused investors to move into safe haven assets such as the USD. As well as the rise in yields, the news that clearing house LCH.Clearnet had raised its initial margin requirements on Italian bonds, making the market more expensive to trade also hit sentiment.
Under heavy selling pressure for …

Greece’s major parties agreed yesterday to form a national government that will oversee elections after putting in place a fiscal deal. George Papandreou will step down to make way for a new PM that will be picked under common agreement. The administration is hoping to agree on the details of the new government today, including the appointment of specific ministers. This is ahead of a meeting of euro zone finance ministers in Brussels that is expected to discuss Greece’s next aid payment. There was some talk overnight that former ECB …

The euro is trading near three week lows versus the dollar after suffering its worst two days of selling since last May as markets react to the surprising news that Greece is to hold a referendum on its latest bail out package. Global stocks also fell sharply on the announcement, which has seen risk aversion spike higher once again on fears over what lies ahead for the euro zone region. Although some in his own party disagree with what he is doing, PM Papandreou has won the backing of his …

With market sentiment on a positive wave after the details of Europe’s debt deal, the euro hit seven month highs of $1.4247 versus the dollar in late afternoon trading yesterday. It came off these levels overnight as investors took a breather after a huge relief rally but further short term gains could be seen. While the deal, which includes an agreement that private investors would accept 50% losses on their Greek debt holdings, leveraging of the EU bailout fund and re-capitalisation of its banks, is unlikely to solve all Europe’s …

The euro hit 7-week highs in overnight trade, breaking through the $1.40 level versus the dollar as markets reacted positively to the news of a debt deal in Europe. Significant gains, however, could be difficult given that markets had already pushed the euro higher on hopes of a resolution. Little is known as yet about the finer details but what we do know is that there will be a 50% write down for private bondholders on their Greek debt, European banks are to be recapitalised to the tune of €110billion …