Opened early Europe at $1.2673, EUR/USD closed in NY at $1.2685, off late rally highs of $1.2730 seen as market reacted to a press report suggesting that Germany had agreed to Eurozone bailout funds buying debt. Later denials from German officials eased rate back to the closing level. Rate initially edged to $1.2690 into early Asia before turning lower, squeezing down to $1.2662 as risk-on was pared back, while equity markets remained fairly flat. The G20 Communique provided little market response. Recovery in Asia extended into early Europe to take rate on to $1.2696 before momentum faltered. Rate drifted back to $1.2670 before picking fresh demand, the rate lifting through $1.2700 but was seen meeting sovereign supply in the area between $1.2700/10 which restricted recovery to $1.2708. Main focus remains on tonight’s FOMC with market hopes for some kind of Fed balance sheet expansion, though QE3 not widely expected, some extension in Operation Twist has been suggested, though market seen open to disappointment, though Bernanke press conference may dampen.
EasyForexNews Research Team