UK Money Transfer looks at reactions to the Eurogroup summit’s outcome

Written by Will Peters Tuesday, 21 February 2012 12:54

This morning the FX markets are reacting to the outcome of the Eurogroup Summit on Greece.

UniCredit tell the editorial team at UK Money Transfer that the outcome, "will be obviously the main driver today for FX majors. Nervous and choppy trading should thus remain of reference also due to a still very light data calendar."

Accordingly, UniCredit forecast that EUR-USD should hold gains, but acceleration above this year’s high at 1.3322 and then towards 1.3385 is unlikely due to the overall risk picture even after the Greece deal. On the other hand, heavier sales should occur only with a pullback below 1.3240 and towards 1.3144.

Looking at the Japanese Yen, the fact that USD-JPY broke even above the last October’s high at 79.51 suggests that sentiment remains negative for the Japanese unit now. In turn, this should help EUR-JPY break through the 106 area.

Optimism about Greece pushed the pound dollar exchange rate back above 1.5850.

Sterling should show a healthy tone for now, but a break above 1.59 will be neither easy nor quick. EUR-GBP should again struggle above 0.8350.

Meanwhile, commodity currencies, like the Canadian Dollar, benefited from optimism about Greece and the PBoC’s cut of the reserve ratio. Yet, soft Canadian retail sales today should spur a USD-CAD rebound back to parity.