The euro hit 7-week highs in overnight trade, breaking through the $1.40 level versus the dollar as markets reacted positively to the news of a debt deal in Europe. Significant gains, however, could be difficult given that markets had already pushed the euro higher on hopes of a resolution. Little is known as yet about the finer details but what we do know is that there will be a 50% write down for private bondholders on their Greek debt, European banks are to be recapitalised to the tune of €110billion …

The euro hit eight month lows of $1.3314 versus the dollar in overnight trade, weighed down by the announcement from the Greek government that it will miss this year’s deficit target. The deficit this year is now expected to be about 8.5% of GDP versus about 7.5% previously. Still weighed down by recession, the economy is forecast to contract by 5.5%, compared with a previous forecasts of 3.9%. It has also been announced that Greece and its EU/IMF inspectors have broadly completed negotiations about the payment of the next set …

For the third consecutive day, commentary out of the Euro-zone guided global markets. Higher yielding and riskier assets, such as the Australian Dollar and the Euro, continued to find higher bids on Tuesday, well-supported throughout the Asian and European sessions following developments surrounding European sovereign debt woes yesterday. The two highest yielding currencies, the Aussie and the New Zealand Dollar, were the best two performing major currencies against the U.S. Dollar, up 1.10 and 1.41 percent respectively, at the time this report was written. The higher yielding assets have continued …

The euro has managed to claw its way back from eight month lows on reports that Europe is considering increasing the size of its bailout fund. The talk prompted a round of short covering. Some players in the market thought this could be extended given the fact that a lot of traders have recently sold the currency. Dollar/euro is well up from yesterday’s lows of $1.3364, with modest gains also seen versus the yen and sterling. Overnight Japans’ government said that it will bring forward plans to ease the pain …

The dollar strengthened overnight after the Fed announced its much anticipated “operation twist” to help stimulate the US economy, with the USD hitting a seven month high versus other major currencies. Its decision to sell $400billion of short-term Treasuries and buy an equal amount of longer term debt was pretty much bang in line with what the market was expecting. This should help keep longer term borrowing costs lower and thus stimulate the economy. However, unlike previous quantitative easing initiatives, this operation does not directly increase the money supply …

The rand declined for a fifth day versus the euro and bonds gained on speculation the central bank will signal further rate cuts this week after the International Monetary Fund lowered its global growth estimate.
The rand weakened as much as 0.6 percent to 10.5892 per euro, the weakest since Aug. 9, and traded down 0.4 percent as of 4:12 p.m. in Johannesburg. The 13.5 percent bonds due 2015 added 44 cents to 122.732 rand, driving the yield down 12 basis points, or 0.12 percentage point, to 6.871 percent.
The …