It was a very quiet session on the data front, but this didn’t stop investors flocking to USD amidst thin trading conditions and concerns about Europe. Greece has been thrust back into the lime light of late by upcoming debt obligations, totalling around EUR5bn.
Concern arose when it became clear the struggling sovereign nation wouldn’t receive its next tranche of aid funds in time for Friday’s debt payment, which Greece may struggle to fully fund itself given the ECB didn’t agree to increase the amount of T-bills it would accept as collateral, meaning banks in Greece will be less willing to purchase them. Nonetheless, given the implications of a default, it seems likely the EU will find a solution before Friday.
Disagreement between Greek’s creditors
After another late night meeting of eurozone finance ministers, disagreement arose between Greece’s Creditors. IMF chief Lagarde and chair of the eurogroup of finance ministers Junker openly disagreed on when Greece would have to reach the agreed upon 120% debt/GDP ratio, with Juncker insisting Greece had been given an extra two years, pushing the data back to 2022, but the IMF Chief insisted the IMF was sticking with a target of 2020.
Later on, Greek Finance Minister Stournaras publicly announced that Greece had been given an extra two years. He also added that Greece was likely to receive its next aid payment in late November/early December, but this is far from a certainty, especially given the sheer amount of signatures that are required before the aid can be dispersed. Furthermore, the current disagreement between Greece’s creditors is only going to complicate the situation. Thus, it may only be a matter of time before the market becomes fed-up with the infighting in Europe, some of which we saw today in the form of a big EUR sell-off.
Weak AU data and risk-off sentiment hits AUD hard
Nonetheless, the euro wasn’t the only currency to suffer. AUD was also a victim of the negative sentiment stemming from Europe but also fell prey to poor business confidence data out of Australia.
Business confidence in Australia dipped back into pessimistic territory in October according to NAB, falling to -1.3 from 0. According to the survey, deteriorating capital spending is to blame, which declined to its lowest level since August 2009.
AUDUSD couldn’t hold up to the risk-off sentiment and the negative data, eventually briefly punching through 1.0400. The aussie fell even further against the yen, with investors flocking to the safe haven currency in latter part of the session. AUDJPY finally found some support around 82.55, beyond this we are watching around 81.95 – Friday’s low.
Ones to watch: NZDUSD
This pair suffered heavily late last week, but has held up fairly well since then. It is currently finding some support around its 50hr SMA. Overall, our bias is lower for NZDUSD, especially if tomorrow’s retail sales data prints weaker than expected, which may intensify selling pressure in the kiwi after the very disappointing Q3 labour market data earlier this month.
NZDUSD – hourly