EUR USD (1.3260) A vote to get the Greek bailout deal approved in the German parliament looms. Important thing is the issue of increasing the resources of the ESM to €750 billion. As before, the IMF and other eurozone members are in favour of increasing the ceiling. For the markets however, the discussion is hardly new. Similarly, Fitch’s latest verdict on Greece’s credit rating, and the renewed pressures on the bond prices and CDS spreads are also close to a non-event, although they do come at the uncomfortable point for the PSI agreement. The eurozone PMI data, although technically below expectations, has also done little more than confirm a popular fear since the start of the year, namely that the eurozone as a whole might be on the brink of recession. The Chinese PMI data, again indicating contraction, highlights how the eurozone crisis is denting exports. The only genuine surprise that the news flow of the last couple of weeks has delivered is the sharp increase in the oil prices. The last time crude prices spiked to the current levels, the euro enjoyed a more comfortable exchange rate against the dollar. So this represents a very chilly headwind for the eurozone economy, but one that has received proportionally less market attention. The euro, however, remains resolutely confined to the range set in the immediate aftermath of the weekend’s EU finance ministers’ meeting. We still see it with a potential to climb to 1.3395. Good support waits at 1.3130.
Click here to read the full report: Daily forex 02.23.12
Deutsche Bank