Gains have been seen in most of Asia with risk on sentiment being the main theme after a concrete agreement regarding the Greek debt situation was made between Eurozone ministers and the IMF; reaching a deal to cut Greek debt/GDP to 124% in 2020 and with interest above financing costs on bilateral loans to Greece falling to 50bps from 150bps once Greece reaches 4.5% primary surplus. As such we saw broad strength in EUR/USD, piercing the 1.3000 level, not seen since October 30th, but most of the initial EUR strength has been pared as participants see that details are as expected on the Greek deal, in a move resembling buy the rumor sell the fact.
Looking at Asian equity markets, the Nikkei 225 and KOSPI started off lower, but have moved back into positive territory after benefiting from positive risk sentiment after the agreement of the release of the Greek tranche. In addition, the ASX 200 has seen solid gains having been led by health care and telecommunication sectors. In some individual stock news we have seen pharmaceutical company CSL trade higher by 7.29% on the back of the news that the Co.’s EPS growth will exceed profit growth expectations. On the contrary, Shanghai Composite is still trading in negative territory, down 0.7%, on continued caution due to uncertainty over the domestic economy testing the 2,000 level again.
Specifically in the FX market, we had South Korea’s finance minister Kim say that authorities are to inject more liquidity to FX market if needed and will introduce rules to limit currency forward contracts at foreign bank branches to stem the USD/KRW’s 9% drop over the last 6 months. However, despite these comments, USD/KRW has continued to strengthen as these moves by the South Korean government were well telegraphed to banks before the official announcement. Also, it is worth noting that CNY strengthened to hit a 19 year high after PBoC set today’s mid-point at 6.2852, lower than yesterday.
Looking forward, the calendar remains light, however the Indian finance minister is scheduled to give a speech at 0345GMT/2145CST.
As of 0253GMT:
ASX200 (+0.67%), Nikkei 225 (+0.38%), Shanghai Comp. (-0.71%), Hang Seng (+0.30%), KOSPI (+0.98%)
26 Nov 2012 - 22:18 - Fixed Income - Source: Newswires
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