MORNING BRIEFING: Portugal follows Greece, as Greece urge for global action against speculation in credit default swaps.

What’s new:
China: China’s reserves appropriately diversified, says FX Chief.
China: China is committed to US debt but will be prudent in buying Gold.
Euro zone: Portugal follows Greece as they announce austerity measures.
Greece: Prime Minister urges G20 to crack down on speculators.
United Kingdom: Sterling falters following a weak housing number.
United Kingdom: Moody’s says UK faces dilemma over banking sector.

Today:


Overnight Rates and Indices:
EURUSD: 1.3635 – 1.3596.
USDCHF: 1.0763 – 1.0727.
GBPUSD: 1.5070 – 1.4976.
EURJPY: 123.15 – 122.22.
USDJPY: 90.33 – 89.88.
DowJones: 10’552 -0.13%
NASDAQ: 2’332 +0.25%
S&P 500: 1’138 -0.02%
Nikkei: 10’567 -0.17%.
Shanghai: 3’069 +0.52%,
Gold: $1’123
Crude Oil: $81.39
 
Comments:

The Euro gave back some of its gains yesterday against the US Dollar and the Yen, following Greek Prime Minister’s comments George Papandreou, where he warned that if the Greek crisis were to worsen, it could lead to a new global financial meltdown. The Euro fell to 1.3596 against the US Dollar earlier today and to 122.22 against the Yen. However gains for the Yen were limited as speculation that the Bank of Japan may ease monetary policy further remains.  The Sterling fell to 1.4976 against the USD after reaching as high as 1.5196 yesterday, with slow growth in British House Prices and Moody’s report on the banking sector applying pressure on the Pound.

Meanwhile in Europe, Portugal announced plans to cut its high deficit and debt as they seek to calm investors’ fears that Portugal is next in line to face fiscal problems. The plan is for Portugal to cut its deficit to 2.8% of GDP in 2013 from 8.3% this year by reducing spending on civil servants and public investment, while raising taxes on high incomes and stock market gains.

From Asia, Chinese FX Chief Yi Gang said the $2.4 trillion stockpile of foreign exchange reserves is appropriately diversified in US Dollars, Euros and Yen. He also renewed China’s commitment to the US treasury market saying it is an important one to them. Gang also added that China will attract more capital inflows this year because of expectations of a stronger Yuan, but he gave no hints as to when Beijing will let the currency resume growth.

Good Day.

Emman Xuereb
Trading Desk
RTFX Ltd
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