… The dialogue of the deaf
Ecofin meeting ahead in the day would promise the fireworks, absent due to the extremely light euro zone calendar and the lack of data in the US.
Of course, Spain would be once more in the central role, while market chat continues to bet the timing of the bailout for the country. Greece and Cyprus complete today’s finance ministers’ agenda in Luxembourg although no further details were given, apart from the visit of Chancellor Merkel to Athens on Tuesday to dialogue with PM A.Samaras.
… Meanwhile in the reality of the markets
A break in the late rally from the boundaries of 1.2800 seems to be prompting investors whether this is a pause in order to ‘clean’ the market and later resume the upside, or is the continuation of the downside trend after mid September’s highs in the vicinity of 1.3170
Gareth Barry, analyst at the Swiss bank UBS, maintains the bearish outlook towards the end of the present year, however he remarks “we would be reluctant to sell the euro until Spain requests a formal bailout and the ECB actually begins to buy bonds through its OMT program. Both events seem likely to occur and will probably give the euro one final push higher before the downtrend resumes”. Jane Foley, Senior Currency Strategist at Rabobank, continues to view potential risks for the EUR to fall to the 1.2600 region in the upcoming weeks. “Medium-term, however, we expect an improvement in risk appetite and coincident USD weakness to allow EUR/USD to push towards 1.35 on a 12 mth view”.
… Politicians would dominate Tuesday
The above-mentioned meeting between A.Merkel and A.Samaras would catch traders’ attention after a speech by ECB’s M.Draghi, against a backdrop of rising market chat regarding a full-scale call for aid by M.Rajoy. Data-wise, French budget and trade balance figures will precede Italian GDP for the second quarter and inflation figures in Greece.