Dollar, Yen Continue To Gain As Risk Aversion Spreads.

Currencies Direct May 16th 2012 - < 1 minute read

Risk aversion remains the main theme across
the markets this week with equity market continuing to slide and the
safe-havens of the US Dollar and Japanese Yen performing strongly. Very
positive German GDP yesterday gave the Euro a boost in early trading but again
developments in Greece have swamped any positive Euro related news and driven
the Euro lower against the Dollar and Sterling.  News of large Euro
outflows out of Greece by citizens is not helping the nagging feeling that a
Greek exit from the Euro-zone is approaching faster than European politicians
would like. They have desperately tried to manage the situation to ensure that
if the worst did happen, Greece leaving could be orderly. The fear is now that
politicians no longer have the ability to manage the situation and a disorderly
exit may now be on the cards.

The Bank of England inflation report is due
today at 10.30. We have covered what the Governor is likely to outline, namely
lower that expected growth and higher than expected inflation. The market has
already built that into Sterling and the news will probably play second fiddle
to news coming from the Euro-zone for the rest of the week.

Tonight sees the Federal Reserve minutes
released from the last meeting. As ever, any hint or sign that the FOMC
are considering further easing will see a sharp reversal from the trend in
recent days, equity markets will jump and the USD will sell off from its recent
surge right across the board.

Report by Alistair Cotton


Written by
Currencies Direct

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