Tag Archives: euros

Undecided Direction For Euro Against Major Currencies

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The single European currency did not know where to turn Wednesday noon after an Ecofin Council that has left traders dissatisfied. Around 24:40, the euro is perfectly stable against the dollar at 1.3333 dollar the euro. It ranged from 1.3259 this morning and 1.3359.

The European currency is 0.15% against the yen at 104.2 and against the Swiss franc to 1.2285, but loses much against the pound at 0.8527.

About the European sovereign crisis, the morale of traders still alternates between the hope raised by the effects of official announcement of the old continent and concerns about the real nature of decisions. Yesterday, the meeting of central bankers in the euro area (Ecofin) has released a tranche (the sixth, traders calculate Pictet & Cie) of 8 billion euros in aid to Greece in exchange for austerity measures. Reviewed by Aurel BGC, ‘there will be no default of Greece before Christmas.

However, the European Council of December 8 and 9 this afternoon raises more doubts. The famous European Financial Stability Fund (EFSF) is likely not to be given the capacity of intervention of 1,000 billion initially referred

Economic Concerns For Most European Areas

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The euro traded at less than 1, 40 dollar during the European session and again during the Asian session, but it is far from your fingertips in a range between 1.39 and 1.4550. We continue to believe that the crossing of 1.39 would be the catalyst for a move to $ 1.30.

The announcement of the SNB to index the franc to the euro has helped to halt the depreciation in the morning, but the decision this morning the German Constitutional Court regarding the European rescue fund reminds us that the root causes of weakness of the euro are not eradicated, even if a little short-term relief is welcome.

The SNB will tolerate a large increase in its foreign exchange reserves to halt the appreciation of the Swiss franc and, in time, we expect new moves that would curb capital inflows and asset inflation (as can be seen in Hong Kong and Singapore, for example). On a smaller scale, it is more quantitative easing global and reserves will be, first, recycled on the main European bond markets, reinforcing the downward pressure on yields in the same way as China’s purchases result in lower yields of U.S. Treasury bonds. It is undoubtedly favorable foreign currency assets and provided against the risk, but it is not for the EUR / USD.

Australian GDP figures were published on Tuesday. The annual growth rate is raised from 1% to 1.4%. The RBA firmly maintains the status quo. This is also what we do with our beliefs bearish on the AUD. The figures proved decent.

In Sweden, the Riksbank has revised down slightly its forecast rate hikes for years to come. With 2Y swap rate 2.20% to SEK, expectations of a repo rate to 3.6% in Q3 2014 (instead of 3.8%) appear to be very aggressive, and was thus SEK appreciated. Of course, after the movement of the NOK rally yesterday, the decision tends to encourage investors to move towards the Scandinavian currencies as an alternative to CHF. The Bank of Canada for its part will maintain the status quo. Publication of the Beige book in the U.S. tonight. Improved figures of the ISM services yesterday offered some respite. It’s pretty unusual, but the U.S. will not be at the epicenter of attention today, with all eyes firmly fixed on the euro area and the euro.