Forex News – Sentiment Built Around Europe’s Debt Woes |
The debt crisis remains in focus for another week. And since today there will be no major global economic data, sentiment will be built around the European stress test results, which failed on Friday to reassure investors and convince the markets about the health of the banking system.
The stress test results highlighted that the region's debt woes are only intensifying, since only 8 out of 90 banks showed the capability to survive another recession, while 16 barely passed. Thus investors dumped the euro and other high yielding assets, heading towards safe heaven including gold, USD, CHF, and JPY.
The uncertainties surrounding EU's debt crisis, in addition to the concerns over the outlook for the global growth continue to weigh on markets. Pessimism is dominating the financial markets, as European leaders might fail to reach an agreement to resolve the debt crisis during the summit scheduled later this week.
While the U.S. economic data continued to disappoint, another issue is worrying investors. Officials failed to come up with an agreement to increase their debt ceiling and the debate to reach a resolution till August 2, deadline, continues. This is weighing on the USD, thereby creating volatility within the broad markets.
Gold reached a new record high today at $1600.52 per ounce as of this writing, while the dollar index rose to the highest of 75.64 today and now is consolidating around the 75.50 level. The euro however fell to the lowest of 1.4012 and as of this writing is consolidating around the 1.4050 level.
U.K.will be quiet with data till Wednesday, thereby the GBP will be moving in a euro centric mode. The pound fell today to the lowest of 1.6065 and as of this writing is consolidating around 1.6085. The GBP downside movement is about to persist as officials try to fight poor growth and inflation at the same time.
Originally posted here.
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