In today’s European session, the Euro took a relatively small 30 points against the US Dollar, before erasing those gains ahead of the ECB rate decision. The ECB is expected to keep the interest rate at 0.75%, and any cut in interest rate would probably be Euro negative.
European Council President Van Rompuy started the rally when he said that the preparatory work on a single EU bank supervisor should begin in earnest in early 2013. He also said that the framework for direct bank recapitalization should be finalized by the end of March 2013. Also talking about the timeframe for the single supervisor, ECB member Asmussen said legal framework for the ECB to act as a banking supervisor won’t be in place by January of 2013, as EU lawmakers have to approve any agreement made in the December 12 meeting of finance ministers. Following Van Rompuy’s comments, EURUSD popped up from 1.3045 to 1.3070 in forex markets.
There were a number of economic releases in Europe today. The Euro-zone GDP was confirmed to have dropped 0.1% in Q3 according to a second estimate. Also, Greek unemployment was reported at 26.0% in September. The only release to move the Euro, was the surprising 3.9% rise in German factory orders, which temporarily sent the Euro up to 1.3080.
Additionally, France sold 2027 bonds for a record low yield of 1.56%; however, this news didn’t significantly affect trading.
In Italy, PM Monti won Senate approval for growth measures. However, the government remains fragile as the head of Berlusconi’s People of Liberty party said they are no longer supporting the government but remaining in a position of abstention. In Greece, PM Samaras says that the country’s debt is sustainable, but Greece needs to see some growth in the long term.
The Euro is currently trading at 1.3065 against the US Dollar, as the pair erased earlier gains before Bank of England interest rate announcement. EURUSD resistance might be found by a 2.5-month high at 1.3139, support could be provided by a 3-week upward trend line around 1.3050.
EURUSD Daily: December 6, 2012
--- Written by Benjamin Spier, DailyFX Research
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