Major Pairs Analysis:February 9, 2012

EUR/USD

The euro declined after Greek leaders failed to agree on pension cuts, threatening to derail negotiations with creditors to receive a rescue package. The common currency weakened against 10 of its 16 major counterparts before euro-area finance ministers hold an emergency meeting in Brussels today. The euro fell 0.1 percent to $1.3245 as of 8:36 a.m. in Tokyo from the close in New York yesterday. The European currency declined 0.1 percent to 102.03 yen. Greek political leaders left a pension issue unresolved after a meeting. Prime Minister Lucas Papademos said separately political party leaders agreed on all measures to secure a second financing package except for one and that issue will be dealt with during discussions with the so-called troika. The troika represents the European Commission, the European Central Bank and the International Monetary Fund.



GBP/USD

UK Stocks fell for a third day, the longest losing streak in three weeks; amid concern Greece’s political leaders might fail to reach a consensus on terms for a second bailout. The FTSE 100 index fell 14.33, or 0.2 percent, to 5,875.93 at the close in London. The benchmark measure has still rallied 19 percent from last year’s lowest level as economic data suggested the recovery in the U.S economy is on track. The FTSE All-Share Index also slipped 0.2 percent today, while Ireland’s ISEQ Index lost 0.6 percent. Greek Prime Minister began negotiations on spending cuts with political leaders after delaying the meeting twice in as many days. Papademos held an unscheduled meeting with the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund to discuss the final terms of the bailout.



USD/JPY

Japanese investors’ overseas earnings rose the most in five years in 2011, more than compensating for the first annual trade deficit in 48 years and supporting the nation’s status as a haven. Japan’s income surplus rose 20 percent to 14 trillion yen ($182 billion) last year, according to Ministry of Finance data. That preserved a surplus in the current account, which combines trade and investment tallies, offsetting a decline in exports after a record earthquake and gains in the yen to a post-World War II high. The net inflow of funds enhances the attractiveness of the nation’s debt, helping the government pay for its budget deficits. As a fiscal crisis swept from Greece to Europe’s larger economies last year, overseas investors bought 20.9 trillion yen of Japanese bonds, finance ministry data showed, triple the 2010 level and the most on record going back to 2005.Japan pays 0.99 percent to borrow for 10-years, the second-lowest rate in the world after Switzerland. The current-account surplus shrank 44 percent from a year earlier to 9.63 trillion yen, the lowest since 1996, the finance ministry said. The income balance increased the most since the 21 percent advance in 2006. Japan had a 1.6 trillion yen trade deficit last year, the first since 1963 based on the current-account data.



USD/CAD

The Canadian dollar slipped versus its U.S. counterpart as global investors awaited a decision on whether Greece’s political leaders will agree to conditions required for a second international rescue package. The currency trimmed losses as a draft of a new financing deal for Greece outlined permanent spending cuts the nation faces. Canada’s currency has traded this week within a one-cent range against the greenback. Canada’s dollar depreciated 0.2 percent to 99.60 cents per U.S. dollar after losing as much as 0.5 percent and gaining 0.1 percent earlier. It has traded this week between 99.29 cents and 99.95 cents, following an advance on Feb. 3 to 99.28 cents, its strongest level since Oct. 31.