Technical Analysis: EUR/USD, GBP/USD, USD/JPY, and USD/CAD

Greek Prime Minister George Papandreou pledged to put the European Union’s new agreement on financing for Greece to a referendum, saying Greeks will give him the support to forge ahead with economic reforms.“For the new agreement, we must go to a referendum for Greeks to decide,” Papandreou told lawmakers of his ruling socialist Pasok party in statements  carried live today from Athens on state-run Vouli TV. “Democracy is alive and well and Greeks are being called to rise to a national duty beyond the regular electoral processes.”Papandreou’s gambit risks pushing the country into default if rejected by voters and raises the ante with dissidents inside his own party. Papandreou’s popularity has plunged after a raft   of austerity measures cut pensions and wages, increased taxes and sparked a wave of social unrest. An opinion poll published Oct. 29 showed most Greeks believe the accord on a new bailout package and a debt writedown is negative.“Papandreou could lose the referendum, which means that new elections would have to be called,” Thomas Costerg ,European economist at Standard Chartered Bank in London, said in an e-mail. “Heightened Greek uncertainty could propagate to other fragile euro-area countries, in particular Italy.”  



GBP/USD

U.K. stocks  tumbled the most in five weeks, trimming the FTSE 100 Index’s biggest monthly advance since 2009, as investors awaited details on how Europe  will fund its expanded bailout facility.Xstrata Plc, BHP Billiton Ltd. and Vedanta Resources Plc all sank more than 6 percent as copper  fell on China’s plan to maintain property curbs. Banks and insurers pared last week’s rally as bond risk climbed and MF Global Holdings Ltd. filed for bankruptcy. Homeserve Plc plunged 28 percent.The FTSE 100  retreated 158.02, or 2.8 percent, to 5,544.22 at the close in London as all but three stocks fell. The gauge has still gained 8.1 percent this month after euro-area policy makers expanded the bailout fund ahead of this week’s Group of 20 summit in France. The FTSE All-Share Index lost 2.7 percent today and Ireland’s ISEQ Index slipped 1.1 percent.“Traders continue to rein in some of last week’s enthusiasm ahead of key economic meetings,” said Ben Critchley ,a sales trader at IG Index. “After the positive knee-jerk reaction by markets, many now want to see further details.”U.K. stocks surged this month as investors speculated European policy makers will contain the debt crisis that threatens the global economy. The leaders last week agreed to expand the bailout fund to 1 trillion euros ($1.4 trillion) and persuaded bondholders to take 50 percent losses on Greek debt.G-20 members meet at a summit  on Nov. 3-4 in Cannes,France, as European governments seek financial support from countries outside the euro area. They have already sought help from China and cooperation from the International Monetary Fund. 



USD/JPY

Japan’s move to weaken the yen for the third time this year must be followed up with additional measures to help industries reeling from the strong currency,companies including Toshiba Corp.  and Nippon Yusen K.K. said. “The currency doesn’t move only by intervention,” Makoto Kubo, corporate executive vice president of Tokyo-based electronics maker Toshiba, told reporters yesterday. “The government needs to take various measures on fundamentals.”Exporters, including Toyota Motor Corp.  and Canon Inc .,gained in Tokyo trading as the government’s move, which came after the yen surged to a postwar record of 75.35 per U.S. dollar yesterday, sent the currency tumbling . Additional steps will be needed, said Nippon Yusen, which cited a strong yen among the reasons for forecasting a full-year loss.“We’d like the government to do more,” Yuji Isoda , manager of investor relations at the Tokyo-based shipping line,told reporters in Tokyo. “Ideally we’d like the yen to weaken to around 85 yen to 90 yen against the dollar.”The yen had its biggest intraday drop in three years  yesterday, before trading at 77.93 to the dollar, down by 2.7 percent, as of 7:33 p.m. in Tokyo.A strong yen reduces exporters’ profits by making them less competitive overseas and eroding the value of repatriated earnings.“We welcome the intervention very much,” Hiroki Yoshimatsu, executive officer at Mitsubishi Electric Corp., told reporters in Tokyo. Still, “it’s unclear how long the current level will last.”



USD/CAD

Canada’s dollar fell against its U.S. counterpart as concern that European leaders will struggle to rein in the region’s debt crisis eroded risk appetite. The loonie, as the currency is nicknamed, posted a 5 percent gain this month, the most since it rose 7.9 percent in July 2009. The currency declined  today after Japan intervened in currency markets to weaken the yen, sending the U.S. dollar higher against all of its 16 major counterparts. “Sentiment in markets now is still a bit negative,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York, in a phone interview. “There’s stress in the European banking system that’s weighing on equities and risk- correlated currencies such as the Canadian dollar.” Canada’s currency  fell 0.9 percent to C$1.0008 per U.S. dollar at 5 p.m. in Toronto. One Canadian dollar buys 99.92 U.S. cents. The Standard & Poor’s 500 Index fell 2.5 percent while Canada’s benchmark S&P/TSX Composite Index was down 2.1 percent.Volatility in the Canadian dollar versus the greenback rose for the first time in seven days after reaching the lowest level in more than a month. One-month implied volatility  on the currency pair climbed to 11.6 percent today. It dropped to 11 percent at the end of last week, the lowest level since Sept. 21. It climbed as high as 16 percent on Oct. 4. The average during the past five years is 11.6 percent.