Last week the Euro tanked down to 1.22 then had a significant bounce as hopium took over. As the hopium fades due to political folly in Europe the Euro has ended its bounce and is now below 1.25

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“The largest emerging markets, whose economies grew more than four-fold in the past decade, are making losers out of everyone from central bankers to Procter & Gamble Co. (PG) as their currencies post the biggest declines since at least 1998.

For the first time in 13 years, the real, ruble and rupee are weakening the most among developing-nation currencies, while the yuan has depreciated more than in any other period since its 1994 devaluation. P&G, the world’s largest consumer-goods maker, cut its profitforecast for the second time in two months last week in part because of currency losses. Brazil’s Fibria Celulose SA (FIBR3), the biggest pulp producer, asked banks to loosen restrictions on dollar loans as the real hit a three-year low.”

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Currency board

“Brazil and China will sign an agreement in the coming weeks to swap as much as $30 billion in their two currencies, Brazil Finance Minister Guido Mantega said.

The currency swap, worth 60 billion reais or 190 billion yuan, will be the first step in a broader agreement with Russia, India and South Africa to allow members of the so-called BRICS group of emerging markets to pool resources to better weather the global financial crisis, Mantega told reporters yesterday in Rio de Janeiro.

The agreement, which was discussed this week by leaders of the BRICS at a Group of 20 summit in Mexico, marks another step in a deepening trade between the world’s two largest emerging markets. China overtook the U.S. in recent years to become Brazil’s biggest trading partner, though Mantega said yesterday that the $76 billion in bilateral commerce last year, 17 percent of Brazil’s total, is just the beginning.”

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“The Australian and New Zealand dollars climbed as U.S. reports next week may show slowing new home sales and weakening confidence, boosting speculation the Federal Reserve will add measures to support the economy.

The so-called Aussie strengthened versus most of its 16 major peers this week after Fed Chairman Ben S. Bernanke said he may consider a third round of asset purchases, or quantitative easing, after a two-day central bank meeting this week. Gains in both South Pacific currencies were tempered as Asian stocks extended a global equity rout and after Moody’s Investors Service lowered the ratings for 15 banks, including Credit Suisse Group AG and Morgan Stanley.

“There are some prospects the Fed will embark on QE3 somewhere in the later part of the year,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There will still be interest to buy the Aussie and the kiwi on dips, but they’re still a sell on rallies.”

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down 0.9%

“Australia’s dollar slid and New Zealand’s pared an earlier gain as Asian stocks declined and Chinese data added to signs the global growth is slowing, damping investor appetite for higher-yielding assets.

The so-called Aussie and kiwi fell from seven-week highs as a report signaled Chinese manufacturing may shrink for an eighth month and commodities dropped to the lowest level since 2010. The Federal Reserve yesterday decided to not implement more asset purchases and lowered growth forecasts. The New Zealand dollar rose earlier after a government report showed the nation’s economy was accelerating.

The Australian and New Zealand currencies “have been undermined on the day by the weakness in regional equity markets,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “It looks as though Asia was more disappointed than the U.S. equity market that the Fed didn’t take stronger action. It’s certainly spilling over to both Aussie and kiwi.”

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“The euro snapped two days of gains against the dollar as a report showed euro-area services and manufacturing output contracted in June, adding to signs Europe’s debt crisis is blunting economic growth.

New Zealand’s dollar strengthened after a report showed the nation’s economy grew at the fastest pace in five years last quarter. A composite index based on a survey of purchasing managers in services and manufacturing in the 17-nation euro area was below the 50 level that separates contraction from expansion for a fifth month.”

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Source

“The secret’s out: No one has any idea how the Euro is going to perform against the dollar.

Ticker Sense’s Laszlo Birinyi has compiled the major Wall Street analysts’ forecasts for the Euro against the U.S. dollar movement, and found an incredible divergence.

Here’s Birinyi’s chart: ”

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And the full list:

Read more: http://www.businessinsider.com/chart-wall-street-euro-forecast-2012-6#ixzz1yFdLkIAg

The Aussie and Kiwi dollars rallied in a risk on trade after Greece had a majority vote won by a pro bailout party. According to traders the currencies were deeply over sold as of last week.

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Exit polls point to a positive outcome for the conservative party in Greece. As a result, the Euro is +0.7% versus the dollar.

The Euro has begun to down tick 0.4%….

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The Aussie and Kiwi dollars rose based on central bank fever. Investors are betting on a global central bank put.

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“Last night we noted that OandA will shut-down trading on Sunday ahead of the market-moving events surrounding the Greek election (as it seems they are unwilling to take the agency risk and potentially counterparty risk on a large gap). Nowhere is this more clearly priced into the market than the short-dated FX option market. EURUSD 1 week implied vol is at its greatest premium to realized vol ahead of this weekend than at any time in the last three-and-a-half years. The last time the level of short-dated vol was near this high (in absolute and relative terms) was December 9th 2011 and EURUSD fell 400 pips in the next few days.”

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“The Swiss central bank pledged to keep defending its franc cap and left borrowing costs at zero to protect the economy from “exceptionally high” risks as the euro area’s crisis intensifies.

The Swiss National Bank (SNBN), led by President Thomas Jordan, today maintained the ceiling at 1.20 francs per euro and reiterated that it will uphold the measure “with the utmost determination.” The Zurich-based central bank also kept its benchmark interest rate on hold, as projected by all 20 economists in a Bloomberg News survey.”

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“The dollar declined before a U.S. report that economists said will show consumer prices fell in May, strengthening the case for the Federal Reserve to take more steps to bolster the economy.

The U.S. currency declined versus 13 of its 16 major counterparts ahead of data tomorrow forecast to show industrial production almost stalled in May and manufacturing in the New York region slowed this month. Gains in the euro were tempered after Spanish bonds slumped after Moody’s Investors Service cut the nation’s credit rating and Italy’s borrowing costs rose. New Zealand’s dollar strengthened after the central bank left interest rates unchanged.”

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The Euro is currently up 0.0027 @ 1.2529

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The Aussie and Kiwi dollars were off to a good start last night, but Italian bond yields and the upcoming Greek vote curbed bullish appetite. Gains were pared off and negative territory was entered against 16 major currencies.

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The Yen fell against 16 major currencies after the IMF called the currency overvalued.

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Losses to the two currencies may have been overdone; as a result traders covered shorts and went long for a bounce.

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