EUR remains weak on Greek budget cut measures, FOMC decision on tap Snap-Shot

Currency Tech

EURUSD  R 2: 1.4455  R 1: 1.4380 CURRENT: 1.4385 S 1: 1.4190  S 2: 1.4125 GBPUSD  R 2: 1.6385  R 1: 1.6310  CURRENT: 1.6240 S 1: 1.6095  S 2: 1.6045 USDJPY  R 2: 81.05  R 1: 80.65  CURRENT: 80.25 S 1: 80.00  S 2: 79.70 AUDUSD  R 2: 1.0725  R 1: 1.0630  CURRENT: 1.0593 S 1: 1.0475  S 2: 1.0440

Market Brief

Despite the Greek Prime Minister Papandreou winning the confidence vote, the Euro remains weak on speculation that the government will struggle to pass an austerity package through the parliament. The Euro declined against most currencies as the PM seeks approval for 78 Billion Euro of bailout package of budget cuts and asset sales with the Dollar strengthening against high-risk assets on EU fiscal issues slowing down global growth. EURUSD traded at lows of 1.4346 after moving to highs of 1.4434 immediately after news of confidence vote. Markets had priced in the confidence vote being won which saw declines later creeping in the currency and is likely to move down a bit before this week’s EU leaders’ meet starting tomorrow. European finance ministers said this week they would hold off on approving a 12 billion-euro payment to Greece promised for July until passage of plans to cut the deficit and sell state assets. The aid is part of last year’s 110 billion-euro bailout from the EU/IMF. Papandreou will meet his ministers today to discuss a draft law for the government’s five-year fiscal plan, one of two laws that need to pass by the end of the month to qualify for EU aid.  Gains in the dollar were tempered before the Fed ends a two-day policy meeting today and Bernanke holds a press conference. Policy makers will keep the benchmark at 0% - 0.25%, where it’s been since December 2008 while the Fed is scheduled to end its $600 billion QE2 this month. U.S. home prices probably fell 0.3% in April, while yesterday’s existing home sales decreased 3.8% to a six-month low in May. Bernanke will probably delay the Fed’s exit from record stimulus, giving the flagging economy a boost without resorting to additional asset purchases and have given no indication they’ll tighten policy anytime soon. With manufacturing slowing and unemployment increasing during May to 9.1%, the Fed chief said this month growth is “frustratingly slow,” and Lacker said the economy could be “stuck below trend for some time.”  Currency trends were dominated by Greek austerity package passing concerns as Dollar gained against most majors with the GBPUSD down to lows of 1.6196 on expectations that the BOE minutes of meeting would show a more dovish stance on rate hikes, AUDUSD moved lower to 1.0569, NZDUSD moved down to 0.8114 as the Fed is expected to maintain stimulus measures in today’s FOMC decision, USDCHF moved higher to 0.8431, USDJPY traded at 80.34 highs while precious metals such as Gold traded higher at $1548.85 and Silver to highs of $36.58 while Oil remains weak at lows of $93.32 on expectations of stocks declining lower than expectations and Saudi Arabia may increase supplies to meet demand. Today’s economic calendar would show BOE minutes or policy meeting, EU industrial new orders, US home prices, Oil inventory data but focus would be strong on tonight’s FOMC rate decision followed by Bernanke’s press conference.