Closed in NY at $1.2704 having experienced a volatile reaction to the FOMC extending Operation Twist into year end, initially dropping to session lows of $1.2638 before bouncing sharply back to highs of $1.2744 as details of the release were analysed. Rate then eased to $1.2650 before settling back above $1.2700 into the close as market reacted to headlines suggesting that the EU is poised for a Spain and Italy bailout to the tune of $943bln. Rate touched a high into early Asia of $1.2709 before turning lower, the move down driven by Asian equity markets where the market continued to show disappointment that the Fed didn’t move to QE3 (though this remains in the pipeline), with the added weight from a weaker than forecast China PMI taking the rate to session lows of $1.2660. Rate settled between $1.2665/75 ahead of the European open. Focus now turns to today’s Eurogroup meeting (1500GMT), with comments ahead expected to be watched for. Data wise, Eurozone flash PMI reading will be released from 0658GMT, the data seen providing a better hint for GDP.
EasyForexNews Research Team