Daily FX Commentary
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Big pressures on ECB
Thu, Dec 4 2008, 11:24 GMT
by Tim Clayton
The Euro failed to hold above 1.27 against the dollar in early Europe on Tuesday and dipped to lows near 1.26 as risk appetite deteriorated again. A late rally on Wall Street pushed the Euro back towards 1.27.
There was a 0.8% decline in Euro-zone retail sales for October, maintaining the run of weak data. The ECB will be an important focus on Thursday with markets pricing in a further interest rate cut of at least 0.50% with some speculation over an even bigger cut of at least 1.0%, especially after a 1.75% cut by the Swedish central bank.
As well as the rate decision, the comments from ECB Chairman Trichet will be very important for 2009 rate expectations. The markets will, to some extent, reward a pro-active stance by the ECB, although investors will also be looking for a measured underlying tone and volatility is liable to be high.
The Euro edged lower on Thursday ahead of the European rate decisions with a test of support below 1.26.
Published on Thu, Dec 4 2008, 15:36 GMT
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Investica Ltd
http://www.investica.co.uk | tim.clayton@investica.co.uk
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