Euro falls to 1.3931 from comments of IMF Chief - FX Solutions Market Update, 12th July 2011

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Date: Sat, 23 Jul 2011 Time: 3:16 AM
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Chris Advincula, Chief Market Analyst at FX Solutions (http://www.fxsolutions.com/), provides forex traders with an overview of currency market activity and news on 12th July 2011.
"The euro received another wave of selling pressure at 1.4000 dropping to 1.3931 after comments from the IMF Chief Christine Lagarde. (2:00am GMT) as continued concerns and fears of contagion spread across the major currencies surrounding the debt problems of Italy following Greece.
Comments from IMF chief Lagarde:
- Greek aid package still "work in progress"
- Not yet discussing new Greek terms, volume, conditions

- Can't take anything for granted on Greece package

- Italy facing market-driven issues; needs better growth

- Fund can't react to markets but must watch contagion risk

- IMF "not just a cash machine;" objective is stability

- Repeats warning of massive problems from US default

- To make IMF management announcement Tuesday
Yesterday, the spread of the 10-year Italian bonds againstGerman bonds widened to a record euro-era high of 3 percent and the yield jumped 0.44 percentage points to 5.68%. (Similar to the sharp rise in the Greece bonds last year
above 5.7 percent). The cost of insuring Italian debt jumped to record highs.
Some analyst say Italy faces 175 billion euros in debt maturities this year and has 1.6 trillion euros of bonds outstanding. (The third largest debt pile after U.S. and Japan).
In Washington, the 90 minute meeting in congress yesterday did not achieve any breakthrough and is scheduled for a third day of budget talks today. Obama said that without tax increases, the package would at best be $1.5 trillion in deficit reduction, short of the $2 trillion needed to extend the $14.3 trillion debt ceiling.
Bank of Japan left their rates unchanged between zero and 0.1% following the monetary policy meeting today.
In the exception of Dollar Swiss, all the rates were lower overnight. (Dollar Yen, Aussie, Kiwi, Sterling, Euro and Yen crosses).
The 30-day exponential moving average fell from 1.4200 to 1.3950"
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