Euro Recovers after EU’s Barrosso comments
Euro Recovers after EU’s Barroso comments
Foreign Exchange Overnight/Morning Ranges:
Currency Rates EUR/USD 1.3590-1.3705
Currency Rates GBP/USD 1.5706-1.5800
Currency Rates GBP/EUR 1.1507-1.1575
Germany is the safest currency in Europe to park cash and is now able to borrow at its cheapest interest rates since World War II. But this could have a downside to the Euro as it would weaken the incentive for countries like Italy or Greece to put their finances in order if they know they can get a free ride on Germany’s creditworthiness.
The Euro saw some selling pressure this morning ahead of meetings this week between European heads as well as the visit by US Treasury Secretary Geithner to discuss the Euro Zone fiscal problems.
President Obama criticised European leaders in their inability to create some form of resolving to this crisis despite Germany’s Merkel outright denial that Greece will default. Italy was also dragged deeper into the debt crisis yesterday as their borrowing costs hit a record high since joining the Euro, their final vote for the austerity plan will hopefully be approved by parliament today. The main beneficiary overnight was the USD, even Sterling has lost a little ground after comments from MPC member Posen supporting further Q/E, he also urged Europe and the US to follow suit. Continued interest though to take advantage of EURO purchases this week around the € 1.16 level has led to a weaker Pound in the last 48 hours.
This morning EU’s Barroso confirmed that the EU will soon present options for the introduction of Eurobonds. The euro bond proposal is for all 17 euro zone governments to jointly guarantee each others’ debts, in the form of common bonds although this will take time and not bring about an immediate solution. As a result, the Euro has recovered this morning.
EUR/USD currently 1.3725. Support 1.3600, resistance 1.3900.
GBP/USD currently 1.5808. Support 1.5700, resistance 1.6000.
GBP/EUR currently 1.1515. Support 1.1350, resistance 1.1600.
Oil $ 88.88 Gold $ 1825
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