It’s getting so predictable that next time it won’t pan out. What am I talking about? The tendency for New York to sell EUR/USD they moment it walks in the door, only to watch the pair bounce for the balance of the day.
EUR/USD made a new low at 1.3212 early in the day and now trades at 1.3260.
The ECB guessing game has become a bit more difficult as signs of economic recovery begin to be seen. Since the ECB never pre-commits, as we’ve been told again and again, It is conceivable that they will not give the market as much as it is expecting on the quantitative ease front. Who knows, they could even shock the market and not cut the expected 25 bp to 1.00%, though they’ve given no indication such a move lies ahead.
On the wires, ECB VP Papademos says there will be no susutained recovery before bank balance sheets are repaired.
One factor helping curb risk aversion are signs that the spread of swine flu is slowing. The WHO says they have no intention to raise the pandemic threat level to 6 out of 6.
Keep an eye on the 1.3280 level: that is 50% of the 1.3346/1.3212 decline.
