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

Europe’s debt crisis dominated and distracted a summit of world leaders as Greece’s government veered towards collapse and Italy came under renewed pressure to prove its credit-worthiness. As Group of 20 chiefs began talks in the French resort of Cannes, their focus was on Athens where Prime Minister George Papandreou was clinging to power after abandoning a referendum that triggered a suspension of European aid. Amid concern Italy may be the next domino to fall as its bond yields jumped to an euro-era record, Prime Minister Silvio Berlusconi was pushed by Germany and France to accelerate an austerity drive.Europe’s failure to fix two years of turmoil drew rebukes from foreign leaders concerned global economic growth is under threat. The European Central Bank  offered relief with an unexpected interest-rate cut although its new president, Mario Draghi, said a euro-area recession is looming.“Our partners should be acting significantly more actively   and decisively,” Russian President Dmitry Medvedev said in Cannes. “If this doesn’t happen, we will be hostage to this situation for a long time to come.”Even with the decision by Greek Prime Minister George Papandreou to scrap a December ballot on the terms of last week’s bailout package, German Chancellor Angela Merkel and French President Nicolas Sarkozy kept aid for Europe’s most-indebted nation on ice until it delivers deeper budget cuts.  



GBP/USD

U.K. stocks  advanced as the European Central Bank unexpectedly cut interest rates and Greek Prime Minister George Papandreou signaled he won’t call a referendum on the country’s latest bailout package.Barclays Plc rallied 1.9 percent as financial shares gained following a 25 basis point cut in the ECB’s benchmark interest rate. Man Group Plc rose 2.4 percent as the largest publicly traded hedge-fund manager reported a smaller-than-forecast decline in profit.The FTSE 100 Index  climbed 61.54, or 1.1 percent, to 5,545.64 at the close in London, a second day of gains. The gauge has still retreated 2.8 percent this week. The FTSE All-Share Index rose 1.1 percent today, and Ireland’s ISEQ advanced 2.8 percent.     “Moving rates from 1.5 percent to 1.25 percent isn’t going to move the needle for a region that is suffering from structural economic stagnation and too much debt,” Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York, wrote in e-mailed comments. “Psychologically though,   markets love it.”The FTSE 100 has fallen 6 percent this year as Europe’s sovereign-debt crisis threatened to spread. The U.K. is still the best performing equity market in western Europe, except for Iceland, as investors favored companies that are less dependent on the region for sales.



USD/JPY

Japan’s slide back toward deflation means bond investors  are getting some of the highest returns among developed nations even with the world’s lowest yields.Annual inflation slowed to zero in September, meaning investors in the nation’s benchmark 10-year securities receive the full 0.995 percent yield. That’s the highest so-called real yield for any Group of Seven nation except Italy’s  2.79 percent.The Bank of Japan cut its inflation forecast last week and said it would buy more government bonds to underpin an economic recovery being threatened by the yen’s surge to a postwar record. The government intervened on Oct. 31 to weaken the currency for the third time this year. With the Federal Reserve discussing more steps to spur its economy and Treasuries yielding less than U.S. inflation, Japan’s efforts may not curb the yen’s strength “Deflation means the value of a currency rises relative to prices for goods and services, and such a currency tends to appreciate,” said Takeshi Minami , the Tokyo-based chief economist at Norinchukin Research Institute Co., which is a unit    of Norinchukin Bank. “Along with deflation, the Bank of Japan’s cautious stance toward monetary easing gives appreciation pressure to the yen. The intervention effect may wear off,depending on stimulus measures by the Fed.”



USD/CAD

Canadian stocks rose for a second day after Greece halted a vote on its bailout, the European Central Bank cut its main interest rate and profit at companies including Canadian Natural Resources Ltd. beat estimates.Canadian Natural, Canada’s second-biggest energy company by market value, jumped 9.3 percent as crude oil and natural gas climbed. Valeant Pharmaceuticals International Inc., the country’s largest drugmaker, rallied 13 percent after its third-quarter profit excluding certain items surpassed the average analyst estimate by 15 percent. Yamana Gold Inc., Canada’s fourth-biggest gold producer by market value, gained 4.4 percent after raising its dividend.The Standard & Poor’s/TSX Composite Index increased 226.59 points, or 1.9 percent, to 12,468.35.“The earnings are good -- not phenomenal, but good,”Arthur Salzer, chief executive officer of Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($198 million).The index had slipped this week after surging 5.4 percent in October as Greek Prime Minister George Papandreou said he will subject his country’s bailout plan to a referendum. The S&P/TSX is set to underperform the S&P 500 for the first year since 2003 as energy stocks have declined on concern the global economy will slow. Canada is the world’s sixth-largest  oil producer, according to the U.S. Energy Department.