DEBT FINANCING. Euro seen under pressure on the lack of support from G7

LONDON | Sun September 11, 2011 10:13 EST
London (Reuters)-the euro and the currencies linked to growth may fall on Monday, hit by a lack of concrete measures by the Group of seven finance chiefs to face the growth faltering, the growing euro zone debt crisis or exchange rate volatility.
The dollar, Yen and, to a lesser extent, the Swiss franc are set to go ahead with more investors seeking safe-haven currencies on the back of growing stress in the financial market.
That will increase the risk of more intervention by Japanese authorities and Swiss soil.
The flight to safety must orient the main government bonds such as German Bunds and British gilts superiors, leading to wider spreads on the peripheral of euro zone debt, while European banking actions can facilitate mounting worries about contagion engulfing major economies, such as Italy and Spain.
Finance Ministers and Central Bank Presidents of the Group of Seven Industrialized Nations have pledged to respond in a concerted issue to a global slowdown. However, they offered no specific steps and differed in emphasis on Europe's debt crisis.
That probably will offer little consolation to investors who were expecting some sort of coordinated policy response of G7 policymakers at a time when the stock markets have been global growth and Quedo in show increasing signs of slippage.
"As this is far from any commitment to undertake coordinated action in foreign exchange markets, investors tend to react with disappointment when trading resumes on Monday," said Mansoor Mohi-uddin, head of foreign exchange strategy at UBS.
He hoped the Japan to stay under observation for intervention.
Japan's Finance Minister, Jun Azumi, said he met with little resistance to another intervention in the G7 meeting. Japan last intervened in the currency market on August 4 to bring down the yen to a record level against the dollar.
"We hope that the authorities of Japan will act unilaterally if the dollar/Yen again tests its post-war low of 75.95 yen. So we think investors should instead maintain favouring the dollar now when seeking safe-haven currencies, "said Mohi-uddin of UBS.
The dollar index, which measures performance against a basket of six currencies including the euro, Yen and sterling, rose to its highest point in six months on 77,276 on Friday.
In a bullish signal, it closed above its moving average of 55-77.01 week. The resistance was seen at the base of the Ichimoku cloud around weekly 78.05, while strong resistance was the 38.2% retracement of fall of the index of an elevation of 88.71 in June 7, 2010 to a low of 72,696 in May 4, 2011, which comes in 78.80.
The dollar is set for strong gains against the euro, which last week fell to its lowest in six months, to about $ 1.3627. The euro Posted its biggest weekly fall since mid-August last year, with many looking for it test 1.35 in the short term.
EURO ON THE DESCENT
The euro also fell sharply against the Japanese yen of safe-haven on Friday, falling to its lowest in nearly a decade. He finished the week at 105.85 yen and a break below the psychologically key level 105.00 could see him fall toward the 100 yen in the coming weeks, analysts said.
Howard Wheeldon, strategist of BCG Capital Partners, said the weekend's developments provided little confidence to investors in the eurozone, and next week will see increased volatility in stock markets.
That could hurt the euro more in the coming days.
The euro was sold last week, after the European Central Bank President, Jean-Claude Trichet went on the monetary policy stance of a belligerent bias to a more neutral.
The shock resignation of Member Juergen Stark, which highlighted sharp divisions within the central bank on its purchases of government bonds on the secondary market and concerns that Greece cannot protect its latest help plot against the IMF/European Union, the Governing Council also added to the woes of the euro.
Investors will also probably be shaken by a weekend report of Der Speigel magazine that the German Finance Ministry was looking at scenarios that included Greece leaving the euro.
Indeed, the latest data from the Commodity Futures Trading Commission showed speculators added to your bets low against the euro on the week of September 6.
"With $ $1,40 going last week, I think that the euro could fall to $ 1.35 in the coming days," said Michael Derks, Chief Strategist at FXPRO. "The dollar will perform the currency they will earn from safe-haven inflows due to risks of intervention in yen and the line in the sand that was drawn up on the Swiss franc by the Swiss National Bank".
On the charts, short term, support was seen at $ 1.3426, a low blow on 14 February and where the euro began its shift to a high of 17 months in $ 1.4939 reached on 4 May.

Posted in: DEBT FINANCING. under,pressure,support