PaxForex Fundamental Analysis

Dec 3, 2012
6
0
12
British Virgin Islands
Euro Gains due to Strong Risk Appetite

For Tuesday, expect the Euro to strengthen in its currency valuation, as risk appetite shielded the euro from waning, as Greece’s 13 billion dollar bond buyback plan helped risk appetite to increase in the euro-zone. With Greece, in an effort to reform its worsening economy and reduce its debt at a sustainable level has revealed plans yesterday to spend up to 10 billion euro in bonds buyback program to help ease and stabilize its burgeoning debt. In addition, the region finance ministers have approved a 39.5 billion euro aid to Spanish banks, thereby warding off the threat of Spain for a bailout.
Furthermore, Europe’s economic data show promising reading, starting with the Euro-zone’s final manufacturing PMI rising to 46.2 in November, which is in line with the flash estimates and compared to a reading of 45.4 in October. German manufacturing PMI seasonally adjusted reading climbed to 46.8 in November as compared from its previous reading of 46.0. In addition, the French manufacturing PMI rose to a reading of 44.5 in November, below the flash estimates of 44.7. In Italy, the seasonally adjusted manufacturing PMI declined to 45.1 in November, from 45.5 in October. On a seasonally adjusted basis, manufacturing PMI in Spain climbed to 45.3 in November, from 43.5 in October.

Meanwhile, Spain registered unemployment increased by 74,296 people in November, this data came from Spain’s Public employment services of all regions recorded an increase of 74, 296 people, in relation to the previous month, representing an increase of 1.54%. The total registered unemployment stood at 4, 907, 817 people, this November reading include the effects of the termination point of special agreements mandatory Social Security for careers of people in the situation of dependency. Despite this negative news coming from Spain, the overwhelming data in Greece about the bonds buyback program gave risk appetite higher gain for the Euro. As sentiments was supported by positive news from Europe but dented by US data. Spain formally requested 40 billion euro of EU aid for its banking sector, which Euro-zone finance ministers are expected to approve at today’s monthly meeting.
Moreover, with the 39.5 billion euro aid to Spanish bank given by the European finance ministers will help its troubled banks to get into its feet, as Mr. Juncker said that the implementation of the program is well on track with all the required requisites all in place as enshrined in its memorandum of understanding. The four nationalized banks will received 36.7 billion euro out of an already-promised 100 billion euro will be given to Navagalicia, Catalunya Caixa will received 4.5 billion euro and 4.5 billion euro will be given to Banco de Valencia.

Commentary

For today, expect the Euro to show gains, as the euro is now gaining due to the higher risk appetite experience in the European markets. This gain is due to the Greece’s 13 billion dollar bond buyback plan helped risk appetite to increase in the euro-zone. With Greece, in an effort to reform its worsening economy and reduce its debt at a sustainable level has revealed plans yesterday to spend up to 10 billion euro in bonds buyback program to help ease and stabilize its burgeoning debt. This optimism showed the markets certainty on Greece which is now doing something to ease the tension in its economy. Meanwhile, in Spain the 39.5 billion aid for its ailing banks have been given a green signal by the EU finance ministers, which will help its banks to get on its feet thereby helping shape the fiancé sector of Spain.
Thus, the positive results in Greece and Spain are showing optimism on the Euro, helping risk appetite to gain higher on its valuation shielding the Euro from waning.
 

mumuy

Active Trader
May 3, 2013
193
7
27
Euro strength is again undermined, this time due to the annual inflation data in the region, as most expect it to hold at the lowest in three years, a level that opened the door for the European Central Bank to cut the benchmark interest rate earlier this month. In addition, Markets saw some hectic movements yesterday, when gold prices bottomed at $1,400 a barrel for the first time in more than three weeks as the Greenback surged against major currencies, while the euro continues to stretch the downward trend ahead of key inflation data from the 17-nation bloc.
 

Rambo35

Confirmed PaxForex Representative
Apr 22, 2013
909
23
32
Canada
I think the Euro will strengthen over the next few weeks and approach the 1.3000 level due to a combination of US economic disappointment and some better than expected Eurozone data.