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

European finance ministers held back a rescue package for Greece in a rebuff that left its lawmakers in Athens under government pressure to endorse a newly minted austerity plan or exit the euro. The refusal to deliver a 130 billion-euro ($173 billion) bailout for Greece reflected the euro area’s frustration with the country’s bickering politicians and the prospect that they may again backtrack on commitments not passed into law. Greek Finance Minister Evangelos Venizelos said the parliamentary vote set to begin this weekend amounted to a referendum on euro membership. He said that after the gathering yesterday, attended by International Monetary Fund chief  Christine Lagarde and European Central Bank  President Mario Draghi, came hours after Greek Prime Minister Lucas Papademos and party chiefs ended a week of talks with an agreement on a package of austerity measures.

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GBP/USD

Bank of England officials pumped another 50 billion pounds ($79 billion) into the U.K. economy to protect a nascent recovery from the threat posed by Europe’s debt crisis. The nine-member Monetary Policy Committee raised the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts, according to a statement. The stimulus expansion suggests policy makers remain concerned that Europe’s failure to stem its debt turmoil poses a risk to Britain and may pull inflation below their 2 percent goal. While it was noted improvements in some business surveys last month the growth outlook remains weak and are concerns about the debt in some euro-area nations. The pound rose after the announcement. Bonds fell, pushing the yield on the 10-year gilt up 3 basis points to 2.209 percent. The yield fell to 1.917 percent on Jan. 18.

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USD/JPY

Mazda Motor Corp., the maker of the RX-8 sports car, is being downgraded by bond investors after reporting its fifth straight quarterly loss. Yields Mazda’s 0.84 percent  notes due January 2016 jumped 27 basis points to a record 120.8 basis points more than the yen swap rate on Feb. 7 from 93.6 Feb. 2, when Japan’s Rating & Investment Information Inc. warned  it may cut the company’s debt rating to the lowest level of investment grade. Spreads on similar-maturity bonds from Toyota Motor Corp. and Honda Motor Co. were about unchanged in the period, while those for German-based Daimler AG’s North American finance unit shrank. Mazda, the least profitable of the nation’s eight biggest carmakers, is forecasting its biggest annual loss in 11 years because of disruptions from October floods in Thailand and slumping demand in Europe. The Hiroshima, Japan-based Company, which lags behind Toyota and Honda in developing hybrid vehicles, reported a net loss of 73 billion yen ($945 million) in the quarter ended Dec. 31. The carmaker forecast it will post a 100 billion yen loss in the 12 months to March, five times the deficit it projected earlier. Mazda’s President Takashi Yamanouchi said Feb. 2 he’s confident the company will return to profit next fiscal year.

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USD/CAD

Canada’s dollar touched a three-month high versus its U.S. counterpart as Greece reached an austerity deal required for a second bailout, easing concern Europe’s sovereign-debt crisis may worsen. The euro advanced against most major peers and crude oil, Canada’s largest export, rose. The Canadian dollar had another decent day after rallying on the back of the euro with the news that Europe may have reached a resolution with Greece. The announcement spurred some risk appetite as we saw commodities rally and equities modestly higher. Canada’s currency appreciated 0.1 percent to 99.47 cents per U.S. dollar after reaching 99.26 cents, its strongest level since Oct. 31. It weakened 0.2 percent earlier. The loonie has traded this week between 99.26 cents and 99.95 cents. The loonie and the euro both gained against the majority of their most-traded counterparts.

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