Stocks jumped globally on June 29 after euro-area leaders dropped the requirement that governments get preferred creditor status on crisis loans to Spain’s blighted banks. Lenders can also be recapitalized directly with European bailout funds rather than being channeled through governments, European Union President Herman Van Rompuy said after a two-day summit.
“The latest EU summit has clearly bought time for the euro. But it still does not remove the bearish case for the currency,” Mansoor Mohi-uddin, head of foreign-exchange strategy in Singapore at UBS AG, wrote in a note on June 30. “The market is likely to focus on whether the ECB will cut interest rates” at the July 5 meeting.
Futures traders increased their bets that the euro will decline against the dollar, according to figures from the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a drop in the euro compared with those on a gain was 159,880 on June 26, up from 141,066 a week earlier. The so-called net shorts reached a record 214,418 on June 5.
HSBC Holdings Plc and Markit Economics today said the final reading of its Chinese manufacturing index was 48.2 in June, down from 48.4 the prior month.
New Zealand’s dollar may climb to the highest in more than two months as its short-term momentum has a “bullish” bias, Niall O’Connor, a New York-based technical analyst at JPMorgan Chase & Co., wrote in a research note yesterday.
The so-called kiwi is facing an ‘important’’ test at the level of 80.60 U.S. cents to 80.90, which sits on a downtrend line from the Feb. 29 high, the analyst wrote. Rising above that level may take the currency toward April highs, according to O’Connor.
The South Pacific nation’s currency jumped as much as 2 percent on June 29 before trading little changed at 80.06 today. It reached 83.20 on April 13, the highest since March 2.