Outlook for US dollar remains good despite the Spanish 'Immaculate Injection'
- Details
- Category: US Dollar Exchange Rate
- Published on Monday, 11 June 2012 14:05
- Written by Will Peters
"In addition to the weekend news though, investors are likely to remain cautious heading into the Greek elections at the end of the week" - Shaun Osborne at TD Securities.
The US dollar (Currency:USD) is closing the gap on those currencies that took advantage of a 'euphoric' Asian and early-European trading session.
The pound v US dollar exchange rate is still however firmly ahead by 0.37 pct on a day-to-day basis at 1.5531. (We have just updated the FX forecast section at our IMT site - access is Free via this Facebook gateway link). 
The euro v dollar exchange rate is 0.18 pct up at 1.2538.
"Spain got its “immaculate injection” over the weekend – a bailout of up to EUR100bn for banks that the government said it didn’t need just a couple of weeks ago and one which comes with little (official) oversight. The markets breathed a sigh of relief but, this being Europe, bail outs are usually just the start of the problems and potentially pose more questions than they answer," says Shaun Osborne in a morning FX note at TD Securities.
Osborne says there should now commence a decent bout of intra-eurozone acrimony.
Indeed, the pro-risk mood that greeted very early Asian trade has faded somewhat more obviously as the European session wore on but the USD remains broadly lower and equities are still better supported – for now.
"We remain cautious on the prospects for risk assets still and, as a consequence, feel the USD should remain supported," says Osborne.
As markets digest the implications of the bailout commitment – including the hurdles still to be overcome – the market is more likely to find blemishes than further positive consequences of the weekend announcement.
"In addition to the weekend news though, investors are likely to remain cautious heading into the Greek elections at the end of the week. That should leave the EUR under pressure," says Osborne.
