Euro Rises On Optimism Ahead Of Finmin Meeting

The dollar softened on Monday as risk appetite strengthened on optimism of Greece receiving the next tranche of its bailout money ahead of a meeting of euro-zone finance ministers in Brussels on Tuesday. Sentiment was also boosted by data that showed a rise in Existing Home Sales to 4.79m from 4.69m previously, which was above the 4.75m expected; this equated to a 2.1% swing from the -2.9% previous figure when a -0.2% change had been the consensus estimate. The NAHB Housing Market Index in Nov rose to 46 from 41. COT report showed a further increase in shorts of dollar counterparts such as the euro which rose to 83.6k, which although not at an extreme could be forming a basing pattern on the long-term COT chart with the possibility of a recovery soon and thus perhaps some dollar weakness to come.

EUR
The euro rose on Monday in anticipation of positive news from Tuesday's meeting of euro-zone finance ministers in Brussels, who will be gathering to decide whether Greece should receive it's next tranche of bailout money. There are now signs this could well be the case and a rebound in the euro is a possibility. The Greek government introduced further policies in order to sugar the pill for the E.U and IMF, including privatizations and closer monitoring of finances. The two-year extension to the fiscal adjustment programme has also opened a 30bn financing gap which will probably also be discussed at the meeting as will the 120% target by 2020. Euro rose despite poor data, showing a -4.2% fall compared to m/m (Sep) compared to the 2.7% rise previously. Italian Industrial Orders meanwhile fell by -12.8% from -9.0% and m/m by -4.0% from 0.6% previously. Euro-zone Construction Output fell by -1.4% from 0.6% and by -2.6% y/y from -1.4%.

GBP
The pound rose on Monday after an increase in risk appetite on the back of hopes for Greece receiving the next tranche of bailout money. Data from the U.K showed house prices moderating, with a continued lead of the previous year, after data from Rightmove showed a rise of 2.0% y/y versus 1.5% previously whilst m/m the picture was less rosy with a fall of -2.6% from 3.5%. BoE Minutes, scheduled for release on Wednesday and Public Finances data on the same day are the main events on the horizon for sterling traders for the rest of the week. The BoE minutes, however, are unlikely to spark activity unless they show particularly doveish voting. Policy-makers decided to keep policy unchanged at the November 8 meeting after strong Q3 GDP figures surprised investors the week before, and it would be if the minutes revealed a close run vote that the pound might weaken as speculation once again could gather pace for the possibility of another round of stimulus.

JPY
The yen traded mixed on Monday, edging higher versus the dollar but falling to the euro and the pound. The continued weakness came as a result of concerns that the BoJ will enact more quantitative easing after December's election. There was also pressure on the yen ahead of tonight's monthly rate meeting although the central bank was not expected to make any policy changes. Recent polls suggest that the election could be a closer race than previously thought and if no party wins an outright majority then that might lead to a recovery in the yen as it would prevent the ADP opposition party from printing unlimited amounts of money and -- or lowering interest rates to below zero. Obviously a major factor in the yen's value will also be how the crisis in the euro zone unfolds as the currency is still used widely as a safe-haven.