The currency blog

Yesterday’s move in the Euro tells you all you need to know about the markets confidence in European leader’s current solution to the on-going crisis. The fiscal problems of European governments have frozen the Euro-Zone banking system to the point where banks are now almost exclusively only dealing with the ECB rather than other commercial banks, because the uncertainty over who and how much toxic sovereign debt everyone is holding has reached fever pitch. The Euro-Dollar pair continues to trade towards the 1.30 level this morning which is keeping downward pressure on Sterling against the Dollar and slowly pushing the Pound higher against the Euro. The 1.30 level is key; if we manage to break through it to the downside, there is the possibility of a larger move lower but it is looking well protected at the moment.

Read the rest of this entry »

The Euro continues to underperform especially against the USD and the JPY where it hit a two month low. There is a growing concern that rating agencies will downgrade European sovereigns in the near term.  In addition the lack of a clear plan moving forward from the EU summit is denting confidence in the single currency.  The market was also fearful in advance of this morning’s bond auctions from Euro sovereigns- it is understood that appetite was ok but there was rumours of a little help from the ECB.  Asian stocks have also declined in line with the growing concern for Europe.  The key level for EUR/USD is the 1.31 barrier- a move below this level could open the door for a push under 1.30; this would help GBP/EUR push towards the key 1.20 level.

Read the rest of this entry »

The package produced by EU officials on Friday has struggled to contend with the high expectations before the EU Summit. However, production of a fiscal compact, the stepping up of the European Stability Mechanism (ESM) to July 2012, no compulsory private sector involvement in debt reform and a feasible boost to the IMF of up to €200 billion, are all positive moves. The fact that David Cameron has decided to reject a joint tender to revise the EU Treaty should not detract from the steps forward made.

Read the rest of this entry »

It was akin to a game of chicken as David Cameron jockeyed the EU to protect the city and Britain’s interests.  In the end Cameron blocked a crucial EU treaty as he did not get the safeguards that he was looking for.  So where does this leave Britain- isolated? fortunate?  Politically Cameron has certainly put the cat amongst the pigeons with the Euro a political minefield in a liberal/conservative coalition. 

Read the rest of this entry »

The European Commission has announced that it will order Spain to appear before the European Court because of its ‘discriminatory rules relating to Inheritance and Gift Taxes’. This situation has arisen because, despite receiving two previous warnings in 2010 and earlier this year, non-resident EU citizens are still being asked to pay higher taxes than those resident in Spain.

Read the rest of this entry »

After the blow to the Euro following the Standard and Poor’s ratings news on Eurozone countries, the currency has managed to regain some form of stability ahead of the EU Summit commencing tomorrow. Hopes that the French -German deal publicized on Monday will be finalised at the summit are high and the threat by S&P means that the stakes are getting higher should there be a halt in progress this week.

Read the rest of this entry »