Up-Beat Comments Support Risk But No Decisions Yet
Littlefish FX | Nov 20, 2012 06:45PM ET
Risk currencies seem to be holding up well this week as we suspected.
Overnight (literally after I had already published the Daily Trading Update); Moody's downgrade France from AAA to AA1. This caused some volatility in the euro.
Two key things on our agenda today, Eurogroup meeting with a view to decision on Greece and Bernanke speaking on fiscal cliff.
Eurogroup first which offer a few interesting points. Comemnts were flying on the initial Greek bond buyback offer expected at around 25% of face value, this could give a nice cut to Greek debt if they can secure the funds to do so. The IMF restated the importance of the 2020 target for the debt to GDP ratio (previous comments on whether it could be extended to 2022). It is reported that during discussions on cutting interest rates on bilateral loans to Greece from 150bps to 25bps, comments were that Germany wasn't so keen on this (surprise, surprise). Overall, though there were some positive comments no decision has been made yet. Essentially the markets will remain in a bit of chop as they hold their wait and see position on this.
Bernanke's view on the fiscal cliff was also interesting. For a start he was rather up-beat on the US economy should everyone work together for a solution (seems like a big if), although he did highlight that a long-term solution was urgently needed, which needed to avoid adding to the economic headwinds. Bernanke also highlighted that this isn't something the Fed can solve but merely offset the headwinds.
EUR/USD
EUR/USD Bounced around today in quite a choppy range, this actually offer up a small pin, however is sat with a soft resistance above and at a key level. We would rather for a more decisive signal.
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