Currency Briefing - what you need to know for Fri May 11, 2012

The Singapore dollar slipped above the $1.25 threshold, currently trading at $1.2517.

IG Markets Singapore said:

The Singapore dollar enters Friday’s session slipping above the $1.25 threshold as investors remained cautious about political events in the eurozone.

The local currency had traded up at S$1.2550 yesterday but gained some ground after stronger-than-expected Australian jobs data helped restore some confidence in Asian currencies.

The markets have reacted badly to the Greek election debacle and some slight recovery has been expected. But on the whole currency traders have remained cautious with so much uncertainty still evident.

This morning we have Chinese inflation figures due out while Singapore’s inflation data will be released this afternoon. Both have the potential to move the pair.

The Singapore dollar currently trades at $1.2517.

GFT meanwhile noted (for 10 May 2012 trading):

The euro finally snaps its losing streak, rising for the first time in 9 trading days.

There was not much in the way of good news but a decline in Spanish bond yields helped to lend support to the currency. Yet despite the recovery in the euro, investors remain nervous about Greece and they have good reasons to be.

With Samaras and Tsipras failing to form a coalition government, the baton has now been passed to Pasok leader Venizeolos. It would be wishful thinking to hope that the third time will be the charm. Most likely, he will fail just as miserably as his predecessors, leaving the country with no other option than to hold another round of elections in June.

Greek bonds have fallen to all time lows with investors wondering how likely a euro exit really is. The Democratic Left wants to keep the country in the euro, a view shared by most Greek citizens. However they may be forced to leave if they fail to meet bailout terms.

According to the European Union, Greece has enough financing until the end of June but next week we have a large bond redemption that could trigger more uncertainty for the euro. Greece will need to decide whether to default or pay the EUR450 million bond and with a hung parliament, the decision could be exceptionally difficult.

RBS, on the other hand, reported (for 10 May 2012 trading):

Most G10 currencies stayed within relatively narrow trading ranges as US equities finished slightly positive.

GBP held onto most of its gains versus both the USD and EUR following the Bank of England's unchanged policy decision.

USD/JPY made a modest jump early and stayed between 79.90 and 80.00 for the rest of the session.