Euro Drops on Greece Fears, Aussie Dollar Rises With Chinese Stocks

The Australian Dollar outperformed in overnight trade, tracking an advance on China’s Shanghai Composite stock index. The equity benchmark rose for a sixth consecutive day to the highest level in over 7 years. Newswires chalked up the move to follow-through on last week’s announcement of the “Made in China 2025” plan, a 10-year effort meant to upgrade the manufacturing sector. Traders may have bet that the program will benefit Australia – for whom China is the leading export market – and its pivotal mining sector.

 

The Euro turned lower after ominous comments from Klaus Regling, the head of the ESM bailout fund, renewed worries about Greece-linked instability. Regling said in an interview with Bild that officials were “working day and night” to come up with an accord but cautioned that “little time is left”. He went on to warn that insolvency would result without a deal to get new loans, adding that “even missing a payment to the IMF would be dangerous [and] affect other lenders, like us.” 

 

Looking ahead, a quiet economic calendar in European trading hours will see investors looking toward US news-flow for direction cues. April’s Durable Goods Orders and New Home Sales figures as well as May’s Consumer Confidence report are on tap. Federal Reserve Vice Chair Stanley Fischer is also scheduled to speak on the outlook for the global economy. 

 

US data outcomes have been stabilizing relative to consensus forecasts over the past two months after a sharp downturn in the first quarter. If this proves to precede a turn upward, traders may begin to bring forward the expected timeline for the post-QE Fed interest rate hike. With that in mind, upbeat outcomes on today’s releases coupled with rhetoric suggesting the US central bank remains open to the sooner onset of tightening from Mr Fischer may drive the US Dollar higher. Needless to say, soft figures may inspire the opposite reaction.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Trade Balance (NZ$) (APR)	123M	98M	754M
22:45	NZD	Exports (NZ$) (APR)	4.17B	4.27B	4.92B
22:45	NZD	Imports (NZ$) (APR)	4.04B	4.12B	4.16B
23:30	AUD	Weekly Consumer Confidence Index (MAY)	113.5	-	114.6
23:50	JPY	PPI Services (YoY) (APR)	0.7%	0.6%	3.1%

 

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
10:00	GBP	CBI Reported Sales (MAY)	20	12	Low

Critical Levels

CCY	Supp 3	Supp 2	Supp 1	Pivot Point	Res 1	Res 2	Res 3
EURUSD	1.088	1.0931	1.0954	1.0982	1.1005	1.1033	1.1084
GBPUSD	1.5376	1.5427	1.5449	1.5478	1.55	1.5529	1.558

 

Written by Ilya Spivak, Currency Strategist for DailyFX.com

Source:http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2015/05/26/Euro-Drops-on-Greece-Fears-Aussie-Dollar-Rises-With-Chinese-Stocks.html