The Opening Bell: Where currencies start on Friday, October 28, 2011

The Opening Bell: Where currencies start on Friday, October 28, 2011

By Dan Bell


Markets SOAR as the EU bailout is agreed upon…




Main points:

  •     Nominal write-down of 50% (EUR 100bn) of Greek debt in private hands; Greek debt owned by official lenders not touched
  •     Remaining Greek debt will be refinanced at preferential rates
  •     Closer supervision of Greek adherence to the program
  •     EFSF to be levered 4-5 times
  •     President Sarkozy will speak with China on EFSF involvement
  •     Estimates of EFSF firepower ranged from EUR1.0-1.4tn
  •     Italy to deliver specific budget and deficit reduction program
  •     Banks must meet minimum capital requirements, seek private capital to cover shortfall
  •     If private capital raising insufficient, national governments and then EFSF to meet banking sector needs

But have we seen anything new? Will this be enough? The NZDUSD has raced higher to open around 0.8200 this morning! The world is a happier place today… allegedly…

The EURUSD has seen a 4c rally (1.3850 – 1.4250), the AUDUSD has almost seen 4c as well (1.0380 – 1.0750) – RISK ON

The NZD rallied after yesterday’s predictable RBNZ decision to hold rates at 2.50%, don’t expect a rate cut here until mid-2012 now

Global stock markets have clearly had a positive night: Dow Jones +3.22%, S&P +3.38%, FTSE +0.5%. Commodities the same, CRB Index currently +2.57%.

Against the crosses.. AUD 0.7650, EUR 0.5780, GBP 0.5095, JPY 62.25


Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Comment Filter

Highlight new comments in the last hr(s).

Your access to our unique content is free - always has been. But ad revenues are diving so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.