The Euro regained its footing & climbed up 0.7% to 1.2598, after dropping last week to its lowest level versus the dollar since July 2010. June will be a key month as investors await the Greek election.
The Euro strengthened for the first time in five days and Asian stocks rebounded from a five-month low after opinion polls of Greek voters eased concern that the country will exit the euro zone (As fore-casted earlier) & also as data showed trader bets for a decline in the currency reached a record high. Greece’s conservative New Democracy political party, which supports the European Union’s bailout plan is gaining ground ahead of June 17 parliamentary elections & was placed first in all six opinion polls published on May 26 as campaigning continued for next month’s general election.
The Euro may now find strong resistance at 1.2790 levels & support at 1.2475 or on any further weakness, lastly at very strong support of 1.2385. INR today bounced up to 55 as expected from a decline to 56.38, Forecasted to find resistance at 55 from 56.38 /US$ last week.
More than $4 trillion was erased from the value of global equities in the first three weeks of the month on concern Greece will abandon the euro. Hedge funds and other large speculators increased wagers the euro will drop versus the dollar to 195,361 contracts in the period ended May 22, the most on record going back to 1999, data from the Commodity Futures Trading Commission show.
Gold also edged higher today, tracking a rebound in the euro after opinion polls showed the Greek public favored pro-bailout conservatives, easing some nervousness in financial markets, but uncertainty over the euro zone undermined market conviction. Fears that Greece may leave the euro-zone have sent gold prices plunging in recent weeks. Greek fears have sent investors ditching the euro in exchange for the dollar, a traditional hedge to gold, and a rising dollar often translates into falling gold prices. A strong showing by New Democracy could lead to a coalition government in favor of sticking with austerity in exchange for bailout funds, which could stabilize the euro which in turn would strengthen Gold prices.
Speculators cut their net long position in U.S.gold futures and options to its lowest since December 2008 in the week ended May 22. Net long position in silver dipped to the lowest level since November, 2008, the U.S. Commodity Futures Trading Commission said.
US markets remain closed for the day on account of Memorial Day & trading may remain range bound for the day.
Spain’s wealthy Catalonia region sought central government help as it was running out of options for refinancing debt this year, adding to worries about Spain’s finance. Spain’s borrowing costs shot up at a bond auction on Thursday, last week and its troubled banks suffered a double blow, with shares in part-nationalized Bankia diving and 16 lenders – including the euro zone’s biggest – having their credit ratings cut.
This week investors will look atU.S.non-farm payrolls and China’s official purchasing managers index data to gauge the health of the world’s top two economies.