[AcetraderFX]

Market Review - 06/02/2012 21:54 All times in GMT

Euro rebounds on short-covering despite delay in Greek debt talk

Despite weakness in Asia and European session on Monday after Greek coalition parties were unable to reach an agreement to receive a second bailout from international creditors, short-covering in New York session lifted the single currency.

The single currency opened lower at 1.3076 in Australian morning (New Zealand was closed for market holiday) from 1.3156 late Friday and remained under steadied selling pressure throughout Asian and European sessions, price then ratcheted lower to 1.3027 in New York morning as it became clear that a Greek debt agreement was not going to be reached by Monday's deadline. However, euro supportive comments from German Chancellor Angela Merkel and concessions from Greek government helped the euro stage a strong rebound later in day and sent price to a session high of 1.3142 in New York midday before easing.

German Chancellor Angela Merkel said "we refuse to acknowledge Greek bankruptcy, we cannot accept that" and Greece accepted demands for 15,000 more public sector jobs to be cut.

The British pound tracked euro's intra-day movement closely and weakened to a low of 1.5730 in European morning before rallying in tandem with eur/usd in New York to a session high of 1.5841.

Versus the Japanese yen, the greenback maintained a firm undertone in Asia following Friday's rally, price climbed briefly above 76.74 res to a session high of 76.80 in Asia before retreating in New York session due to dollar's broad-based weakness, the pair traded around 76.55 near New York closing.

French President Nicolas Sarkozy said "Greek situation has to be solved once and for all; no release of funds unless decisions are taken in Greece; we are decided that by start of March new treaty will be adopted by 25 countries; have never been closer to agreement on Greece." He and Merkel agree that necessary Greek interest payments should be paid into a separate account.

In other news, IMF chief economist Olivier Blanchard said "looks like haircut on Greek private creditor debt will be very large; Greece probably will not be able to financial markets for a long time."

On the data front, EU Sentix investor confidence improved to -11.1 in February from -21.1 previously. Germany factory orders m/m and y/y were better-than-expected at 1.7% and 0.0% vs forecasts of 1.0% and -0.4% respectively.


Data to be released on Tuesday:

Australia RBA rate decision, UK BRC retail sales, Japan leading indicators, Germany Industrial Production, and Canada building permits.