Italy expected to pass crucial bond auction test

Italy expected to pass crucial bond auction test

(Reuters) - Italy is expected to succeed in selling bonds on Thursday in a crucial test of its ability to continue funding itself from the markets. But a smooth sale would not remove longer-term worries over its financial health. more....

EUR/USD Classical Technical Report 07.14

By Joel Kruger , Dailyfx

EUR/USD: Overall, price action remains quite bearish and we continue to like the idea of selling into rallies in anticipation of a more sizeable pullback below the 200-Day SMA. The longer-term moving average resides by the 1.3900 figure and a clear break below will open the door for a test of next key support in the 1.3750. In the interim, look for the formation of a fresh lower top somewhere ahead of 1.4400 ahead of the next drop.

Obama and lawmakers face fresh doubts on debt deal

(Reuters) - Sharply divided by partisan bickering, President Barack Obama and top Republicans face growing doubts on Thursday about the prospects for reaching a deal to avoid a potentially disastrous debt default. more...

5 reasons why the Euro isn’t trading much weaker

5 reasons why the Euro isn’t trading much weaker

July 13th 2011: 5 reasons why the Euro isn’t trading much weaker

Amid the lurid media headlines during the past few days of Euro-zone crisis, panic and collapse, the surprising feature is not that the Euro has fallen – the big shock is that the currency is not trading substantially weaker. There is increasing evidence of longer-term forces at play which are keeping the Euro afloat. If we rewind just over 12 months ago to when the Greek crisis first erupted, the Euro hit a low below 1.20 against the dollar. Despite the debt crisis being much more severe this time and the Euro’s future in very serious doubt, EUR/USD is still close to 1.40.

The Euro-zone backdrop remains precarious at best with several of the weaker members already passing beyond their event horizon as they get pulled towards the black hole of default. Greece has no viable escape route from default with Portugal and Ireland also have no real possibility of escaping from the debt trap as they remain mired in recession. To avoid default, an economy either needs to let inflation and exports improve the debt-servicing profile through devaluation or there must be capital transfers and neither of these are possible under the current Euro set-up. It is increasingly likely that there will be a destructive break-up of the Euro-zone and the currency is likely to fall sharply this quarter, but strategic players are looking at the long-term view and to what happens after any break up.more...