GE IFO Slightly better at 108.6 vs. 108.4
EG Finance ministers Meeting starts
Nikkei -0.83% Europe 0.96%
Oil $57/bbl
Gold $1192/oz.
Europe and Asia:
EUR GE IFO 108.6 vs. 108.4
North America:
USD Durable Goods 8:30
The EUR/USD rallied to the 1.0900 level on the back of slightly better German IFO reading and hope for a EZ deal on another Greek rescue package but came off those levels as markets awaited the start of the meeting.
The pair climbed higher at the start of European trade on hopes that progress was being made on the negotiations with Greece. Comments from France's finance minister Michel Sapin that primary surplus targets were negotiable suggests that EZ officials may nearing an agreement with Greece that should stave off any risk of default for the time being.
The markets will be watching the meeting very carefully today which will be the primary driver of trade for the rest of the day. A deal with Greece could provide a pop for the unit but the 1.11000 level remains significant resistance for the pair and it is likely to stall there once again if it rises that far.
On the economic front the IFO reading came in slightly better than expected at 108.6 versus 108.4 with current assessment reading rising to 113.9 form 112.4. The news dovetails with the improved GDP forecast out of Germany and no doubt the lower exchange rate is helping to support the country's massive export sector, but growth in the rest of the region remains lackluster which is why any further upside in the EUR/USD may be limited.
A key reason for euro's recent strength has nothing to do with events in the EZ but rather with the disappointing string of economic data out of the US. The numbers this week have failed to assure the market that US is moving towards escape velocity as most of the data has been mixed. Today's US Durables Goods report will be yet another data point for the market to consider with consensus view calling for a rebound to 0.2% from -0.6% the month prior. A second negative monthly reading in a row would put major dent into the dollar's bull thesis that US economy is decoupling from the slow growth in the rest of the world and could trigger a deeper correction in the greenback as the day proceeds.
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