EUR/USD Extends Gains On Fresh Greece Optimism

– The euro extended gains against the U.S. dollar on Tuesday, rising to a four-day high on the back of fresh hopes that an agreement on a second bailout for Greece could be close.

EUR/USD hit 1.3212 during U.S. morning trade, the pair’s highest since February 2; the pair subsequently consolidated at 1.3202, gaining 0.56%.

The pair was likely to find support at 1.3027, Monday’ slow and resistance at 1.3232, the high of January 27 and a five-week high.

The euro was boosted by reports that Greek government officials were putting together the final draft of a bailout agreement ahead of meeting between Greek Prime Minister Lucas Papademos and coalition leaders later in the day.

Greece needs to reach a consensus on the terms of the bailout in order to secure the rescue package and avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Eurogroup President Jean-Claude Juncker said earlier that he was confident Greece would remain in the single currency bloc, provided that the country fulfilled its obligations to other bloc members.

The euro came under pressure earlier Tuesday after official data showed that German industrial output dropped by 2.9% in December, disappointing expectations for a modest 0.1% decline.

The euro was also higher against the pound, with EUR/GBP advancing 0.61% to hit 0.8346.

Elsewhere Tuesday, Federal Reserve Chairman Ben Bernanke was testifying on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.

U.S. stocks lower with Greece in focus; Dow Jones down 0.38%

– U.S. stocks were lower on Tuesday, as market sentiment was weighed by uncertainty over prolonged talks to secure a new bailout package for Greece and avoid a sovereign debt default.

During early U.S. trade, the Dow Jones Industrial Average fell 0.38%, the S&P 500 index declined 0.47%, while the Nasdaq Composite index retreated 0.30%.

Greek Prime Minister Lucas Papademos was set to hold talks with coalition leaders later Tuesday to try and reach a consensus on the terms of a second bailout, after postponing talks on Monday and failing to finalize an agreement over the weekend.

Earlier in the day, Eurogroup President Jean-Claude Juncker said he was confident Greece would remain in the single currency bloc, provided that the country fulfilled its obligations to other bloc members.

Energy stocks were broadly lower as shares in Chevron and Exxon Mobil declined 0.8% and 0.42% respectively, while Noble Corporation plummeted 3.26%.

BP saw shares tumble 1.51% despite posting earnings slightly above forecasts and a better-than-expected dividend increase. The company also said it was preparing “vigorously” for lawsuits related to its Gulf of Mexico oil spill, due to start later this month.

Financial stocks also added to losses as Goldman Sachs dropped 0.95% and Citigroup retreated 0.81%, while JP Morgan and Bank of America slid 0.45% and 0.13%.

On the upside, Coca-Cola climbed 0.35% after the beverage giant reported better-than-expected results and announced a new cost-savings program.

Yum Brands also gained 3.45% after the parent company of KFC reported earnings that beat estimates thanks to accelerating sales in China.

Toyota Motor jumped 2.90% as the Japanese automaker reported stronger-than-expected earnings and raised its annual forecast on cost cuts and Japanese government subsidies.

Meanwhile, General Motors fell 0.60% after saying it sold 246,654 vehicles in China in January, down 8% from a year earlier. It attributed the decline to fewer shopping days during the Lunar New Year which fell in January this year.

Across the Atlantic, European stock markets were lower. The EURO STOXX 50 retreated 0.57%, France’s CAC 40 dropped 0.49%, Germany’s DAX tumbled 0.92%, while Britain’s FTSE 100 fell 0.56%.

During the Asian trading session, Hong Kong’s Hang Seng Index eased up 0.15%, while Japan’s Nikkei 225 Index slipped 0.13%.

Later in the day, Federal Reserve Chairman Ben Bernanke was due to testify on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.

USD/CAD Erases Gains On Greece Deal Speculation

– The U.S. dollar erased gains against its Canadian counterpart on Tuesday, as market sentiment was boosted by speculation that Greek officials were working on the final draft of an agreement on a second bailout for Greece.

USD/CAD pulled back from 0.9995, the session high, to hit 0.9956 during early U.S. trade, dipping 0.03%.

The pair was likely to find short-term support at 0.9927, Monday’s low and a three-month low and resistance at 0.9995, the session high.

Greek Prime Minister Lucas Papademos was to hold talks with coalition leaders later Tuesday to discuss harsh fiscal reforms being demanded by the country’s creditors in exchange for a EUR130 billion aid package.

Greece needs to reach a consensus on the terms of the bailout in order to secure the rescue package and avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Earlier Tuesday, official data showed that the number of new building permits issued in Canada soared in December, rebounding from the previous month’s sharp drop.

Statistics Canada said the number of building permits issued jumped 11.1%, the largest monthly gain since 2007, blowing past expectations for a 0.8% increase.

November’s figure was revised to a 2.6% drop from a previously reported 3.6% decline.

The loonie, as the Canadian dollar is also known, was lower against the euro, with EUR/CAD adding 0.45% to hit 1.3135.

Later in the day, Federal Reserve Chairman Ben Bernanke was due to testify on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.

EUR/JPY Rises To 6-day High But Gains Capped

– The euro rose to a six-day high against the yen on Tuesday, but gains were limited as investors remained uncertain over the outcome of prolonged Greek debt talks due to resume later in the day.

EUR/JPY 100.97 during European afternoon trade, the pair’s highest since January 30; the pair subsequently consolidated at 101, adding 0.49%.

The pair was likely to find support at 99.98, the low of January 30 and resistance at 101.57, the high of January 27.

The euro came under pressure earlier in the session after official data showed that German industrial output dropped by 2.9% in December, disappointing expectations for a modest 0.1% decline.

The weak data sparked fresh concerns over the impact of the debt crisis in the euro zone on the region’s largest economy.

Meanwhile, Greek Prime Minister Lucas Papademos was set to hold talks with coalition leaders later Tuesday to try and reach a consensus on the terms of a second bailout, after postponing talks on Monday and failing to finalize an agreement over the weekend.

Earlier in the day, Eurogroup President Jean-Claude Juncker said he was confident Greece would remain in the single currency bloc, provided that the country fulfilled its obligations to other bloc members.

European Union officials have said a final agreement on Greece’s EUR130 billion bailout must be approved by February 15, in order to avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Elsewhere, the yen was lower against the U.S. dollar with USD/JPY rising 0.22%, to hit 76.72.

Also Tuesday, Japanese Finance Minister Jun Azumi repeated that Japan will not rule out any steps to battle speculative moves in the yen.

Later in the day, Federal Reserve Chairman Ben Bernanke was due to testify on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.

EUR/CHF Pushes Higher After Jordan Comments

– The euro pushed higher against the Swiss franc on Tuesday, after the interim head of the Swiss National Bank Thomas Jordan reiterated a pledge to defend the minimum exchange rate of 1.20 per euro with the “utmost determination”.

EUR/CHF hit 1.2089 during European afternoon trade, the pair’s highest since January 26; the pair subsequently consolidated at 1.2088, gaining 0.22%.

The pair was likely to find support at 1.2057, the session low and resistance at 1.2108, the high of January 25.

Speaking in Geneva earlier, Jordan said the SNB’s use of a minimum exchange rate cap on the franc against the euro was the most effective tool the central bank had to protect the Swiss economy against the risk of deflation and ease pressure on the country’s exporters.

“The situation remains challenging for large sections of the economy, and even at the current rate, the franc is still very strong,” Jordan said. “We expect the franc to weaken over time, and fall back to a level more in line with its economic fundamentals.”

Jordan also said that Switzerland faces “very challenging” times and gross domestic product will slow “considerably” this year as a result of the “subdued outlook” for the global economy.

Meanwhile, the euro remained slightly lower against the U.S. dollar, with EUR/USD slipping 0.12% to hit 1.3114.

Also Tuesday, investors were closely watching developments in Greece, amid hopes that political leaders could come to a consensus on the terms of a second bailout, in order to avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Greek Prime Minister Lucas Papademos was set to hold talks with coalition leaders later Tuesday to discuss what conditions they are prepared to accept, after postponing talks on Monday and failing to finalize an agreement over the weekend.

Euro stocks lower despite Greek hopes, bull market; DAX down 0.43%

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Europe’s Crisis and 4Q Earnings Looks to Shake EURUSD, AUDUSD, Risk

The opening trading session of this week was an odd mix. For contrast to the first reaction to the Euro Zone (France, Italy, Spain, Portugal) downgrades we had the US market offline for a market holiday.

“Europe’s Crisis and 4Q Earnings Looks to Shake EURUSD, AUDUSD, Risk” is categorized as “foreign exchange”. This video was provided by DailyFX.com. DailyFX is a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide. For additional video content, click the “video” tab at the top of this page.

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