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Euro Seesaw Continues as Worries Over Summit Persist

Last updated 10/20/2011 2:51 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Risk FX was lower in Asian session trade today  with EUR/USD falling below the 1.3700 level today as concerns mounted regarding the upcoming EU summit scheduled for this weekend. Reports that officials are having a difficult time arriving at a consensus weighed on risk appetite with Asian stocks selling off across the board    as Nikkei dropped by 1.03% while Heng Seng lost 2.76%.

Among a series of issues that continue to plague the market are statements by German Chancellor Angela Merkel that the summit may not provide a conclusive resolution to the region’s credit problems and an announcement by lawyers in EU that suggests the use of EFSF to provide direct guarantees of bonds may be a violation of the union’s rules.

Trading continues to be driven almost exclusively by headline news regarding the summit with markets generally ignoring economic data. Nevertheless the news on the  price front suggests that ECB may be severely limited in its options to loosen monetary policy given the lingering price pressures in the region. Today’s German PPI data printed hotter than forecast rising by 0.3% on a month over month basis versus 0.2% eyed. Ex- energy the data was more muted but still remains above 5% level on year over year basis.

With no other economic reports on the docket trading may remain quite for the rest of the EU session unless more rumors sweep the markets. The EUR/USD remains in a general state of equilibrium   trading in a wide 1.3650-1.3850 range as markets await some definitive news out of  Brussels.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.