All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

What Cancellation of EcoFin Meeting Means for EUR

Last updated 10/25/2011 10:26 AM ET (GMT -5) 1 Comments

• Share this:

Kathy Lien

Director of Currency Research, GFT

There was shock but no awe in the markets this morning when the U.K. announced the cancellation of tomorrow's EU Finance Ministers meeting.  The EU-27 and EU-17 Leaders Summit will still take place but Finance Ministers will not be meeting in advance to finalize their rescue plan for Europe.  The euro sold off aggressively when the news hit the headlines but rebounded once the EU confirmed that the leaders meeting will still take place.  The cancellation of the EcoFin meeting means one of two things - either the rescue plan has been completely hashed out and another EcoFin meeting is not needed to finalize the details or the talks have broken down and the EU has given up hope that a comprehensive rescue plan will be ready by Wednesday.

Given how euro area officials have acted so far, we are inclined to believe that the cancellation of the EU Finance Ministers meeting means more delays than progress on euro area talks. With that in mind however, there have also been reports that a deal on bank recapitalization and leveraging of the EFSF is close.  We won't know for sure until Wednesday when the EU Summit ends and the press conference is delivered but today's announcement certainly adds a degree of uncertainty in the markets.  We could be experiencing the same Kabuki style performance that we saw during the U.S. debt ceiling talks which would be positive for the euro.  Or the EU will announce a Grand Plan to have a plan which would be disastrous for the currency.  Either way, it is still a question of when and not a question of if a plan will be announced.  It is only a matter of time before they come up with some type of bank recapitalization/Greek haircut/ EFSF leverage plan and for this reason, every dip in the euro has been seen as another buying opportunity. Yet we still recommend putting on those tin hats because trading over the next 36 hours can get hairy.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

• Share this:

Comments (1)

Darkdoji

October 25, 2011 at 06:09 PM ET

I think we know all we need to know about whats ahead. It is ok to flirt with various possibilities but in truth we know they can't fix it. See the problem is with the very structure of the Union - it currently lacks a basis in reality and must of need fade into oblivion. We are in fact witnesses in a very direct way to the end of a massive experiment - that has clearly failed. The experiment was interesting while it lasted and the idea not bad on paper but clearly unworkable in practice - you cannot replicate the USA the way they have gone about it - or more directly you cannot eat your cake and have it. Seems nations like GB had that foresight. RIP EU.

PS: I am not saying they will pack up tomorrow - but pack up they must soon. Germany for one has had enough.

Add Your Comment

Please login to post a comment or sign up for an FX360® account.

Loading...

About The Author

Kathy Lien began her FX trading career 10 years ago at J.P. Morgan Chase. After graduating New York University’s Leonard Stern School of Business at the age of 18, Kathy joined the bank's interbank FX trading desk and eventually moved to the cross markets proprietary trading desk. In the interbank market, her ability to create solid fundamental and technical analysis from the myriad of information on the market helped her trade forex spot and options. Her experience eventually led her to be chief strategist at Daily FX where she worked until she joined GFT in 2008.

With her knowledge of forex, as well as her experience trading other products, such as interest rate derivates, bonds, equities, and futures, Lien has built a reputation as an international currency analyst. She is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters. Lien has also written for publications like Active Trader, Futures, and SFO magazine. She is the author of the newly updated Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Boris Schlossberg.

To buy Kathy’s newly updated Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, click here.