euro rally fights resistance but outlook still grim
Last Updated : GMT 07:56:43
Arab Today, arab today
Arab Today, arab today

Euro rally fights resistance but outlook still grim

Arab Today, arab today

Arab Today, arab today Euro rally fights resistance but outlook still grim

Dubai - Arabstoday

The euro fought stiff chart resistance on Wednesday following a rally after Italy\'s premier said he would resign, but its outlook remained gloomy amid the political turmoil engulfing both Greece and Italy and with those countries\' borrowing costs showing no signs of easing. Greece is scrambling to win emergency funds to avert bankruptcy as soon as next month with political parties arguing over a new coalition government, while yields on Italian 10-year bonds hover above 6.7 percent. \"The euro\'s rise was a typical knee-jerk reaction, and players used it to sell into the rally. We may, however, see another leg up if the Greek government gets appointed,\" said Teppei Ino, currency strategist at the Bank of Tokyo-Mitsubishi UFJ. \"Overall, however, with so many problems it\'s just a matter of time as to when the next fire breaks out in a different part of the eurozone and the euro goes down again,\" he said. Ino added that any euro gains may prove fleeting as it is unclear whether Italy\'s new government would be able to boost growth and implement spending cuts to bring down debt levels. At 120 percent of gross domestic product, Rome\'s massive debt is the second-highest in Europe. The common currency was barely changed at $1.3832, having risen as high as $1.3859 in early trade. The lack of conviction in the euro has been underscored by its week-long struggle to decisively break above double resistance around $1.3850, formed by a 38.2 percent retracement of its slide from $1.4248 to $1.3608 and the top of the Ichimoku cloud on the daily charts. Stop losses looming around $1.3800 could lure short-term accounts and pull the euro lower, traders said. Long-term euro bears, however, remained wary of shorting the currency too heavily, having been stung by its uncanny ability to bounce back even as Europe lurches from one crisis to another. Against the yen, the euro traded mildly lower at 107.36, a long way from a decade low of 100.77 yen, plumbed roughly a month ago. The dollar also lost ground against the yen and broke well below 78.00 for the first time since yen-weakening intervention by Japan last week saw it rise to 79.55 yen. The greenback fell to 77.71 yen as exporters sold during the local fix and short-term players attempted to take out stops reported at 77.50 yen, with more lined up all the way down from 77.40 yen to 77.00 yen. \"With Japanese retail heavily long, the absence of intervention will lead to deeper position unwinding, which will likely trigger another move by the MOF to stabilize the currency,\" said Sebastien Galy, strategist at Societe Generale. Widely awaited Chinese inflation data was roughly in line with expectations, failing to ignite optimism and fuelling a slow decline in the Australian dollar, which shed 0.3 percent to $1.0364 . Against the yen, it shed 0.5 percent to 80.37 as players who initially went long dumped their positions. The numbers showed China\'s annual inflation rate cooling to 5.5 percent in October. The market is still waiting for industrial output figures at 0530 GMT, forecast to show a modest slowdown. Meanwhile, the decline in the Swiss franc paused after a top policymaker at the Swiss National Bank said the recent introduction of the 1.20 francs per euro cap was simply an attempt to limit the currency\'s appreciation to shield the economy. The euro was flat at 1.2392 francs, while the dollar was at 0.8951 francs. SNB Vice Chairman Thomas Jordan told a conference on Tuesday the bank did not want to engage in competitive devaluations. But the SNB is seen as being under pressure to take steps to further weaken the currency as the economy slows. The dollar index last stood at to 76.627, with support seen at 76.456, the November 1 low.

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arabstoday

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Arab Today, arab today

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euro rally fights resistance but outlook still grim euro rally fights resistance but outlook still grim

 



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