Exchange Rate News - Merkel Sarkozey Meeting Drives Risk Sentiments, EUR Sell Off Falters Big foreign exchange decision? Just ask Expert Analyst Samual Allen for a Quote » please click here ? German Chancellor Angela Merkel and French President Nicolas Sarkozy met today in Berlin for talks on resolving the ongoing debt crisis. As expected the? Merkozy? meeting has helped strengthen the Euro in trade today. The two leaders have been working on the much promised fiscal compacting required to help ease the Euro-zone out of its current predicament. The markets anticipated concrete details on the fiscal integration of Euro-zone core and periphery countries to help settle ongoing concerns of the next sovereign default from Spain or Italy. In reality very little has been given for the market to gain confidence.
Economists would argue that Spain and Italy are too big to be allowed to fail with the current ?rescue mechanisms? in place. It would seem from trade today that the market has rallied on the feel good factor of these talks the Euro is currently up 0.2% against the Pound and up 0.15% against the USD. Euro-zone politicians will continue to try and improve sentiment with positive commentary suggesting that they will come to a resolution and fix this crisis. We would however argue that the Euro will likely come under renewed selling pressure in the coming months.
In the short term whilst talks continue throughout this week, it is likely that the Euro could retrace before making its next move. The USD is being driven on a risk bias from Europe and the USD rally is faltering at support as traders assess where the European crisis is going from here. Safe haven flows will likely underpin the Dollar in the near term.
Markets are anticipating another 0.25% rate cut from the Euro-zone on Thursday. The press conference will also help to provide more insight into fiscal policy for the year ahead. The key ongoing concern is the current liquidity issues.
No comments:
Post a Comment