FOREX-Euro declines on fading EU summit hopes - Reuters UK
(Updates prices, adds comment, details changes byline, dateline, previous LONDON)
* Investors pessimistic ahead of EU summit
* Merkel worried EU focused on "easy" crisis solutions
* Dollar index rises to near two-week high
By Wanfeng Zhou
NEW YORK, June 25 (Reuters) - The euro fell to its lowest in almost two weeks against the dollar on Monday and looked set to extend losses as investors doubted a European summit later in the week will find a solution to the region's escalating debt crisis.
Expectations for the two-day EU summit are quite low after a meeting of the euro zone's four biggest economies on Friday, at which Germany resisted pressure for common euro zone bonds or a more flexible use of Europe's rescue fund.
A German government spokesman said on Monday that Chancellor Angela Merkel was worried that just before the summit, people were expressing a wish for "supposedly easy solutions" such as shared liability.
"Again we are likely to get frustrated on the lack of a solution for the debt crisis," said Brad Bechtel, managing director at Faros Trading in Stamford, Connecticut.
"We are only likely to receive the telegraphed European 'blueprint' for the way forward, something that is long term in nature and several referendum and parliamentary wrangling sessions away from here."
The euro fell as low as $1.2469, the weakest since June 12, and was last down 0.6 percent at $1.2490. It lost 1.6 percent to 99.49 yen.
Support for euro/dollar was seen near the June 12 low around $1.2441 and strategists said a break below that level would open the door to a test of the June 1 two-year low of $1.2286.
Spain formally requested euro zone rescue loans for up to 100 billion euros ($125 billion) to recapitalize its debt-laden banks, saying the final amount of financial assistance would be set at a later stage.
Some market economists believe the rescue is merely a prelude to a full bailout for the Spanish state, which saw its annual borrowing costs soar to euro era record levels above 7 percent early last week before easing.
Weak euro zone economic data and rising borrowing costs for peripheral countries will likely heap pressure on the European Central Bank to cut interest rates or expand liquidity operations, prospects likely to keep the euro subdued.
"You have economic growth in the States probably running at about 2 percent annualized rate, and you've got growth in Europe a lot slower than that, so therefore in the relative growth scenario you would still favor the U.S. and that's probably attracting cross-border flows," said Ken Dickson, investment director of currencies at Standard Life Investment.
Greece's new prime minister and finance minister will miss the meeting scheduled for Thursday and Friday, due to illness, which also delayed a visit to Athens by Greece's international lenders.
A German government spokesman said the EU probably will not take any decisions on Greece at this week's summit, dashing Athens' hopes it might ease the terms of its bailout.
DOLLAR FIRMS
Traders have piled back into the dollar since the Federal Reserve held off on aggressive quantitative easing last week and instead extended its "Operation Twist" program, under which it sells short-term bonds and buys longer-term securities to lower longer-term interest rates.
Cautious market sentiment helped the dollar index extend gains from last week to hit a near two-week high of 82.632. It was last up 0.3 percent at 82.502.
The dollar and the yen are usually the most sought-after currencies during financial market stress and economic uncertainty, although the yen's status as a safe-haven currency has been challenged amid concern over Japan's economic problems.
Morgan Stanley analysts put out a long dollar/yen trade recommendation given a consumption tax hike in Japan that looked set to be passed this week, which in the past has weakened the yen.
"This could continue, particularly if the BoJ (Bank of Japan) eases in response to lower demand due to the tax rise. Over the longer term, we maintain our bullish yen view, but look for the dollar to be the best performer in the next few weeks," Morgan Stanley said in a note.
The bank recommended buying the dollar at 79.90 yen, targeting a move up to 84.90, with a stop loss order at 78.90. The dollar last traded down 0.9 percent at 79.66 yen.
Commodity currencies fell against the safe-haven U.S. dollar, extending last week's decline as commodity prices recoiled on the increasingly grim global growth outlook.
The Australian dollar dropped 0.6 percent to $0.9998, with good support expected at $0.9979, the 38.2 percent retracement of its June 1-20 rally. The New Zealand dollar dipped 0.4 percent to US$0.7856. (Additional reporting by Tricia Wright in London; editing by W Simon)
Euro Forecast Bearish but Forex Options Warn of Sideways Chop - Yahoo Finance
DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
DailyFX PLUS System Trading Signals –Sharp Euro declines against the US Dollar (ticker: USDOLLAR) to start the week’s trade suggest that we could see further losses into the week ahead. Yet an important drop in forex options market volatility expectations limits the likelihood of major moves for the EURUSD and other major currency pairs.
Last week we warned that especially indecisive forex market conditions warned of sideways price action, and indeed we see many of the same risks going forward. The major fundamental issues for the Euro remain relevant as markets anticipate a key European summit at the weekend. All else remaining equal we would expect negative sentiment to keep downward pressure on the EURUSD. Yet indecision could force sharp intraday volatility within the broader downtrend.
Clear uncertainty across markets emphasizes the need for strong money management techniques amidst fast-changing market conditions. The sharp drop in market volatility limits our enthusiasm for our “Breakout Opportunities” and Breakout2 automated trading strategies, while broader trends are reasonably supportive of our “Trend Follower” and “Tidal Shift” systems (Momentum1 and Momentum2, respectively).
It could be another challenging week for market conditions, and caution is advised ahead of the weekend’s key European summit that threatens significant uncertainty across European currency pairs.
Market Conditions:
Forex options market volatility expectations have dropped noticeably on what is shaping up to be another week of challenging trading conditions. The DailyFX 3-Month Volatility Index is now below the psychologically significant 10% mark for the first time since early May. If this is indeed the start of lower volatility across the board, we will likely see price action slow down across the board and through often-directionless summer trading.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To contact David, e-mail drodriguez@dailyfx.com
To be added to David’s e-mail distribution list for this and other reports, e-mail subject line “Distribution List” to drodriguez@dailyfx.com
Definitions
Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.
Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near monthly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s monthly range.
Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Bias – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES IS MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION.
OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. The FXCM group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance contained in the trading signals, or in any accompanying chart analyses.
Oi! NatWest, I want my money: How young schoolteacher called Natalie Westerman is being bombarded with complaints on Twitter - Daily Mail
- The 22-year-old has written 'I'm not a bank' on her Twitter profile
- She has been branded a 'dunce' and told to 'sort it out'
- English and media teacher has received more than 200 tweets
- Chaos at bank has now run into a sixth day, with calls for boss Stephen Hester to resign
- A systems failure has left wages unpaid and customers unable to withdraw money, pay bills or use credit cards
- Treasury is monitoring the situation
- Ms Westerman says she will not be changing her username
|
A young schoolteacher has received a barrage of abuse from angry banking customers because her internet profile is called ‘NatWest’.
Natalie Westerman, a 22-year-old from Newcastle upon Tyne, posts on social networking site Twitter under the name NatWest - because it is her nickname.
But since NatWest bank’s IT problems began causing chaos for its customers across the country, Ms Westerman has been receiving the brunt of people’s frustrations.
Spot the difference: Natalie Westerman, 22, has received a barrage of abuse over Twitter following the bank's IT problems - because her username is NatWest
The English and Media teacher has received more than 200 tweets from irate NatWest customers.
She said: 'I joined Twitter about five years ago, when it wasn’t such a huge thing and was only really big in America at the time.
'I chose the username NatWest because that has been my nickname since school.
'It wasn’t until about six months later that I started to get a few comments from people mistaking me for the bank.
'I would just re-direct them and tell them they had made a mistake.
'Companies such as NatWest had not actually started using Twitter yet.
'It is only in the last few years that the mistakes have become more frequent.
'I find it quite amusing to be honest. I have had a few abusive messages in the past but most of the time it’s just people asking me where their money is.'
Identity crisis: The English and media teacher says she finds the confusion funny - and won't be changing her name
Ms Westerman has set her profile description as ‘I’m a 22 year old woman and I’m not a bank’ - but still gets mistaken for the banking giant.
Bank boss Stephen Hester faced calls to resign today as the computer chaos at NatWest ran into a sixth day, prompting the Treasury to monitor the situation.
The bank was this morning still unable to confirm when customer accounts would be returned to normal - almost a week after a systems failure that has left wages unpaid and customers unable to withdraw money, pay bills or use credit cards.
Mr Hester, who is chief executive of the taxpayer-funded RBS Group, which owns NatWest, has promised that 'no one will be left permanently out of pocket' by the computer glitch.
A Twitter user called DAZER asked Ms Westerman: 'Oi @Natwest can I have my money please :('.
Hannah Gangoon told the young teacher, 'NATWEST NEED TO SORT IT OUT', while a user called ‘Mercedes’ branded her a ‘dunce’
Now that the true identity of ‘NatWest’ is becoming known, abusive Tweeters are backtracking and sending their apologies to Ms Westerman.
Twitter user Bethany Black said: 'Can I just apologise now for all the abuse you’ve had off me over the last year thinking you were the bank who f****d up my money.'
Ms Westerman has been replying to tweets and redirecting complaints to @natwest_help - the bank's actual account on the social networking site.
As the tweets continued to roll in, she wrote: 'Ive never felt so popular in my life. I am a person called nat west not a bank.'
She added: 'My friends find it hilarious when I tell them about all the messages I have received.
'I am a teacher and when I recently told the children about what had happened they found it very funny.
'I don’t think that I am going to change my username because I have got friends on Twitter from New Zealand and I don’t want to lose them.
'It does not really bother me when people do mistake me for the bank and it's just humorous more than anything.'
FOREX-Euro falls on uncertainty ahead of EU summit - Reuters UK
* Euro under pressure versus safe haven dollar, yen
* Support for euro expected around $1.2440
* Investors pessimistic ahead of EU summit later in week
By Tricia Wright
LONDON, June 25 (Reuters) - The euro fell broadly on Monday, with sentiment surrounding perceived riskier currencies dented by doubts a European summit later in the week will make headway in tackling the debt crisis.
Investors readied themselves for a disappointing outcome to the European Union summit after a meeting between German, French, Italian and Spanish leaders on Friday saw differences remaining on common euro zone bonds.
The euro fell 0.7 percent against the dollar to $1.2481, with strategists anticipating demand for the safe-haven greenback would persist as uncertainty surrounding the European debt situation holds sway.
"The market is not really expecting much to come out of it... A disappointing EU summit should keep market unease elevated and provide more tailwinds for the dollar," Valentin Marinov, currency strategist at Citi, said.
Support was seen near the June 12 low around $1.2441 and strategists said a break below that level would open the door to a test of the June 1 two-year low of $1.2288.
The common currency dropped 1.4 percent against the safe-haven yen to 99.61 yen on trading platform EBS.
Weak euro zone economic data and rising borrowing costs for peripheral countries will likely heap pressure on the European Central Bank to cut interest rates or expand liquidity operations, prospects likely to keep the euro subdued.
"You have economic growth in the States probably running at about 2 percent annualised rate, and you've got growth in Europe a lot slower than that, so therefore in the relative growth scenario you would still favour the U.S. and that's probably attracting cross-border flows," said Ken Dickson, investment director of currencies at Standard Life Investment.
DOLLAR FIRMS
Traders have piled back into the dollar since the Federal Reserve held off on aggressive quantitative easing last week and instead extended its "Operation Twist" programme, under which it sells short-term bonds and buys longer-term securities to lower longer-term interest rates.
Cautious market sentiment helped the dollar index extend gains from last week to hit a two-week high of 82.587.
The dollar and the yen are usually the most sought-after currencies during financial market stress and economic uncertainty, although the yen's status as a safe-haven currency has been challenged amid concern over Japan's economic problems.
Morgan Stanley analysts put out a long dollar/yen trade recommendation given a consumption tax hike in Japan that looked set to be passed this week, which in the past has weakened the yen.
"This could continue, particularly if the BoJ (Bank of Japan) eases in response to lower demand due to the tax rise. Over the longer term, we maintain our bullish yen view, but look for the dollar to be the best performer in the next few weeks," Morgan Stanley said in a note.
The bank recommended buying the dollar at 79.90 yen, targeting a move up to 84.90, with a stop loss order at 78.90.
Commodity currencies also fell against the safe-haven U.S. dollar, extending last week's decline as commodity prices recoiled on the increasingly grim global growth outlook.
The Australian dollar dropped 0.7 percent to US$0.9993, with good support expected at $0.9979, the 38.2 percent retracement of its June 1-20 rally. The New Zealand dollar also dipped, falling 0.4 percent to US$0.7855. = (Reporting by Tricia Wright; editing by Ron Askew)
MONEY MARKETS-ECB depo rate cut may do more harm than good - Reuters UK
* Money markets increasingly pricing in ECB depo rate cut
* Such a move may have adversely impact repo markets
* May also increase volatility in sovereign bond markets
By Marius Zaharia
LONDON, June 25 (Reuters) - Money markets are increasingly pricing in a near-term cut in the European Central Bank's deposit facility rate, but some players warn that such a move may do more harm than good by lowering banks' incentives to lend.
With the euro zone economy faring worse than expected, the three-year-old sovereign debt crisis intensifying day by day and waning hopes that politicians can get a definitive grip on events, markets are increasingly banking on support from the ECB.
Analysts say forward euro overnight Eonia rates are pricing in an over 50 percent chance that the ECB will cut its deposit facility rate from 25 basis points to zero later this year along with its 1 percent refinancing rate.
But while this would be intended to give a further push to banks to lend to each other and then to businesses to help the real economy grow, it may actually have the opposite effect. Analysts say the few banks that are willing to lend in unsecured lending markets may stop doing so as their return on such transactions may fall below the cost.
More importantly, it could create distortions in the most active sector of the money markets, repo transactions, in which investors raise cash backed by collateral, usually government debt.
The rate to borrow cash using top-rated general collateral (GC), such as a basket of German or French government debt, has recemtly traded 20 basis points below Eonia, the overnight rate for unsecured lending, because of the quality of the bonds on offer.
Eonia, in turn, has settled 10 bps above the deposit facility rate on average in recent months - on Friday it fixed at 0.325 percent. Once the deposit rate is cut to zero, Eonia is expected to fix at around 0.1 percent.
"That would mean that the GC rate will be negative, limiting the ability to get money using the bonds. It can create a distortion in the repo market," said Alessandro Giansanti, rate strategist at ING.
BOND MARKET IMPACT
Any repo market distortion could also lower volumes in sovereign bond markets, as investors who buy government debt to raise cash will no longer have a reason to purchase them.
"This could add to the negative momentum observed in sovereign bond markets, which is reinforced by increased volatility and already impaired liquidity," Commerzbank rate strategist Benjamin Schroeder said in a note.
"Within the context of the broader sovereign crisis, it would be worrying if the ECB risked endangering the still very fragile bond markets in return for questionable positive effects for interbank lending."
Not all analysts are worried that a cut in the deposit rate will have side effects on repo markets.
Max Leung, a rates strategist at Bank of America Merrill Lynch Global Research, said repo rates on a few German bonds - posted as collateral individually rather than as part of a basket - have already turned negative and volumes have not dropped.
"Negative rates is never a good thing because you penalise people for lending, but there are securities which are already trading at negative levels because of flight-to-quality flows," Leung said.
"As far as banks are concerned it still represents business. For the repo desks, they can still charge relatively wide bid/offers so we don't think volumes will necessarily fall because of that."
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