Forex Magnum

The euro (EUR) edged higher to 1.2646 from 1.2542. Sentiment in the market improved after G20 officials said that central banks are ready to stabilize financial markets if the Greek election shakes the market. Greeks will be asked to decide whether they want to stay in the euro facing a continuation of the harsh austerity measures. Exit polls will be released after the election ends at 7 p.m in Athens. Credit rating agency Moody’s downgraded a number of Dutch banks citing risks to the economic outlook in Europe.  Angela Merkel said yesterday that if the euro fails then EU will fail and that it is important that political union must be established. But the single currency remains under pressure as Spanish government bond yields surged to their highest euro-era levels raising fears about Spain’s funding ability.

The US dollar (USD) weakened against a basket of currencies as weaker than expected US economic data raised expectations the Federal Reserve could embark on a third round of quantitative easing to support the ailing economy. US Initial Jobless Claims rose for the fifth time in six weeks and inflation fell in May. Yesterday’s data may be a sign that the economic recovery of the world’s largest economy may be losing momentum. Versus the safe haven Japanese yen (JPY), the greenback plummeted to 78.78 from 79.50 after the Bank of Japan refrained from easing its monetary policy. Focus now turns to the US Manufacturing and Index and Industrial Production data.

The British Pound (GBP) rose against the dollar to 1.5563 from 1.5472 after the Bank of England announced the launch of a new banking scheme to boost lending. George Osborne announced the 100 bln plan to help the UK economy and the chancellor said he was working with the BoE governor towards a new firepower. Mervyn King also raised the possibility of a new round of quantitative easing.

Oil edged higher to 84.77 dollars a barrel from 82.03. Gold (XAU) edged higher to 1626.65 dollars an ounce from 1609.88 and against the euro it edged lower to 1285.26 from 1287.81. Silver (XAG) dropped to 28.17 dollars an ounce from 29.09. Stay in tune throughout the day with foreign exchange bullets!

Equities	EUROPE				US				ASIA3
	FTSE 100	-0.31%	▼		S&P 500	1.08%			NIKKEI	0.02%
	DAX	-0.23%	▼		DJIA	1.24%			HIS	1.08%
	CAC	0.08%			NASDAQ	0.63%			CSI 300	-0.39%	▼