EUR USD Fundamental
Considerably sluggish trade this morning, when all was said and done. The market shrugged off Fed Fisher’s assertion that euro faces bigger problems than greenback and EUR/USD spent most of the morning grinding slowly higher after an early dip.
The Euro dipped to lows around 1.3225 ahead of the US open on Tuesday. Risk appetite remained slightly weaker and this remained a negative factor for the Euro as dollar selling eased. There was, however, a further small decline in 3-month dollar Libor rates which suggests that money-market tensions have not escalated at this stage and this should limit immediate defensive dollar demand.
German February trade surplus 8.9 billion euros versus 6.8 billion in January. Better than median forecast of +7.5 billion. Imports fell sharply, down -4.2% m/m versus median forecast of -2.0%. Exports fell -0.7% m/m versus median forecast of a -3.7% decline.
French February trade deficit -4.107 billion euros versus median forecast of -4.2 billion euros
Bank of France survey sees Q-1 GDP at -0.8%. BOF industry business sentiment index up to 73 in March from 71 in February
Total conviction in the Euro-zone economy remains commonly fragile with doubts over the cyclical and structural outlook. GDP for the fourth quarter of 2008 was revised down to show a contraction of 1.6% from 1.5% previously. The Irish government was forced into an additional budget to tackle the severe fiscal deterioration which reinforced fears surrounding the weaker Euro-zone members. There will also be further speculation that the ECB could intervene to weaken the Euro.
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