With fundamentals or without, it is a new session each day but the scenario is seemingly resilient to change and the sentiment remains the main power play in the market those days!
The market is once again moving by its deepest expectations and inner resentment to the latest reveled chapter in the European Debt Crisis and the reluctance of markets to absorb the worthiness of the aid package to Ireland.
Seemingly, the package is not the question, but the question markets surrounding peripheral nations, where Italian and Spanish bonds continued to slump and the yields soared as investors foresee more problems in the euro area which all will weigh negatively on the growth outlook and the common currency.
The euro declined further today and extended the bearishness versus its major counterparts, especially that the less than anticipated job gains in Germany added to the woes that the recovery is already losing steam.
The euro fell to its weakest versus the dollar today at 1.2978 and linger close around 1.3020 areas leaving the early high intact at 1.3149. The common currency also weakened versus the Japanese yen where it recorded the low of 108.86 and also versus sterling where the pair extended the bearishness setting the lowest so far at 0.8363.
Surely, the dollar’s strength prevailed for the third consecutive session, where haven demand and short term good fundamentals are providing greenback with the stability to continue extending the gains. The dollar index extended the rise today recorded the high so far of 81.34 after setting the low near opening levels around 80.66 and currently hovers around 81.09 areas.
Sterling also surrendered to the dollar and to the prevailing risk aversion sentiment where the pair declined from opening levels today at 1.5569 to set the low of 1.5506 and currently hovers above those areas with an attempt to recover some losses around 1.5540.
The fears are eminent and with China added to the pressure with signals for further rate hikes and monetary tightening the outlook for the recovery is further under risk. The Japanese yen also benefited from this prevailing risk aversion wave where it held its grounds and appreciated versus greenback. The USDJPY pair is currently hovering around 83.79 areas recording so far the high of 84.30 and the low of 83.70. Seemingly the yen is back to reclaim some gains after weakening versus the dollar in the past period with signs of a reversal to the downside from overbought areas starting to be more evident.