Portuguese Bond Sale and Chinese Data Lifts Risk Sentiment
On Wednesday risk sentiment was lifted by a successful Portuguese bind sale and strong global economic data suggesting recovery is well under way. A strong increase in Chinese exports lifted the high yielding Aussie dollar. Australia is a chief supplier of raw materials to China. The Portuguese government which had intended to sell EUR750 million in long term bonds sold EUR990 million worth of bonds easing investor fears of stressed Portuguese government finances. Investors have been fearful of the Greek fiscal crisis spreading to other Euro Zone nations. The successful bond sale helped to lift the troubled euro in currency markets. The euro rose to a two week high against the yen. Most analysts believe the euro will remain under some pressure until some euro zone nations implement austerity measures.
Chinese Exports Increase
Risk sentiment was broadly lifted after February’s Chinese export figures showed an increase of 45.7% over February 2009. The Chinese figures boosted commodity linked currencies such as the Aussie and Kiwi dollars. The rise in risk appetite put the yen under pressure as investors sought higher yielding currencies and assets. Greg Anderson of Societe Generale SA in New York stated, “There is a firm underpinning to the global economic recovery. The yen normally weakens when stocks go up and has been reluctant to do so the last few weeks. Now it’s playing catch-up.” The yen fell against the euro trading at 123.60 per euro and against the dollar the euro gained 0.3% trading at $1.3646.. The Kiwi dollar and the Norwegian Krone were big winners against the dollar as crude oil traded above $80 a barrel and global stocks rose. Some traders expect commodity linked currencies to continue to perform well in international currency markets. Lee Hardman of Bank of Tokyo Mitsubishi UFJ Ltd said, “Conditions will continue to improve on the risk-sentiment front, and the emerging-market currencies and commodity-linked currencies are likely to outperform over the coming weeks.”
Worst of Greek Crisis is Over Says EU Official
In an encouraging statement former European Commission President Romano Prodi said in an interview in Shanghai that the worst of the Greek fiscal crisis is over and should not spread to other EU nations. Prodi stated, “I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.” Andrew Wilkinson of Interactive Brokers Group LLC credited Prodi’s statements for the Euro’s gains. Wilkinson stated, “The words of Prodi are driving the euro higher. Rising German yields tell us that there are fewer concerned investors and risk appetite is back.”
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