Equity markets have recovered tepidly from yesterday’s global sell-off while the euro has come off of its low and the kiwi has rallied.
Global bourses came out of the basement following yesterday’s sharp move into the red. The Nikkei is up slightly 0.17% while the FTSE is trading higher by 0.50%. US stock futures are also trading up.
The euro reached as high as 1.4115 before pulling back after the Greek political opposition declared their obstruction to an increase in austerity measures. However, the opposition party did note they were open to an increase in state asset sales. An uptick in market sentiment could help erase some of yesterday’s losses. EUR/USD resistance is seen at 1.4120 followed by 1.4185 and 1.4240 from the trend line off of the early May high. Support comes in at 1.4030.
The European debt crisis has taken a firm grip on the euro’s trajectory. Today comments from ECB Governing Council member Chrisitan Noyer highlight the opposition to a Greek debt restructuring as Noyer compared the idea of restructuring to, “a horror story.”
European data this morning was weaker than expected as industrial orders for the month of March fell -1.8% on consensus expectations for a decline of only -1.2%.
Recently Spain’s name has been included in the same conversations as the peripheral nations due to this past weekend’s elections. Today Spain successfully auctioned off new bills at somewhat lower yields than at previous level. This may have helped ease pressure on the euro. However the peripheral bonds of Greece, Portugal and Ireland continue to trade at substantially higher yields.
The kiwi was trading higher today after New Zealand inflation expectations rose 3.0% from the Q1 reading of 2.6%. Yesterday the NZD/USD fell as low as 0.7857, a level that coincides with the upper line of a falling wedge pattern. Today after the inflation report the pair broke above the 0.8000 level. The next resistance level for the pair rests at the May high of 0.8120.
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