Archived IMT (2011.04.18)

Greek restructuring speculation and Finland elections overshadow more hawkish rhetoric from ECB as EUR trades down to 1-week low $1.43. WSJ quoted IMF that Greece may seek debt restructuring early next year. Citigroup to post Q1 results at 11:00 GMT (07:00 ET). Fed's Fisher to discuss US economy at 12:30ET. It is a holiday shortened week, which could well be a chance for temporary pullback in the USD.

Sovereign debt crisis concerns pushed to the backburner by ECB tightening and US government budget crisis over the past couple of weeks have resurfaced loud and clear. Greece is back in the spotlight following press reports the finance minister has called for a restructuring of its 340B in loans toward a later date. And while the Greek Finance Minister Papaconstantinou vehemently DENIES RESTRUCTURING (as signalled by the IMF in todays WSJ), euro longs are not taking any chances. With Greek CDS swaps blowing out above 1,200 - new record highs - EUR/USD is testing 2-month-long channel support at $1.43. A breach here brings up the critical $1.4240-50 range, late March resistance turned April 7th support. As we indicated earlier, long positioning by hedgefunds has already appeared overstretched with multi-year high net exposure. Profit-taking on sovereign debt worries, along with a strong showing by the EUROSKEPTIC TRUE FINNS at Finland Parliamentary elections have indeed outweighed additional hawkish comments from ECB officials. Earlier today, ECB's Nowotny said expectations for another 50bps in rate hikes from the ECB are "well founded".

USDJPY IS SET TO FALL FOR THE 8th straight session after having risen 10 consecutive rising sessions in. The pair made new April lows below 82.95 tracking renewed appetite for US debt, as 10-year yields fell about 20bps over the course of last week to low 3.40s%.

CITIGROUP TAKES CENTER STAGE FOLLOWING disappointing results at financials sector leader JPMorgan and laggard Bank of America. A telling Heard on the Street column over the weekend profiling BAC earnings attributed to housing-related writeoffs. The column suggests that while Bank of America has priced in an additional 4% housing decline as a "shock" scenario, other forecasters have allowed for as much as a 10% additional decline. And while the toxic mortgage exposure for Citi is nowhere as potent as for BAC, it does have a tendency to disappoint, with shares falling over 7% the day after last reported results on Jan 18th.

TODAYs US ECONOMIC CALENDAR limited to remarks from Fed arch-hawk Richard Fisher, speaking about the US economy at the Rotary Club in Atlanta mid US afternoon. Dallas Fed President is expected to reiterate inflation risks are out of control and that the Fed has done all it can to boost the economy.

By GG - AshrafLaidi.com Staff