No let up in volatility in the markets as EUR/USD’s sprint to 1.3294 is largely retraced dramatically in just over 24 hours. Expectations of very heavy month-end and fiscal year-end demand for dollars from fund managers is setting the stage.
Also contributing to a weaker euro tone were wildly out of character comments from the Bundesbank’s Axel Webber. he said “If the economy cools, then rates have to come down rapidly so one doesn’t risk falling behind the curve”
Being Halloween, one wonders whether there has been some sort of “Invasion of the Body Snatchers” -type event where the normally tough-as-nail Weber’s brain was replaced with that of a Spanish or Italian central banker. A sharp fall in German retail sales seems to have gotten his attention.
Midday is the witching hour, to use a seasonal metaphor, as the fixing dominates the wholesale market’s attention today. Tread carefully and watch the clock if looking to scalp pips. I’d stay away from 11:30 AM New York time until at least 12:30 PM New York time.
