Forex News: Euro Rides a Rollercoaster on False Bundesbank Rumors
It’s been as exciting European session for Euro traders, as the single currency temporarily tanked on an untrue rumor and then erased all the losses following a surprising ZEW survey.
EURUSD was trading at a session high around 1.3371 when a rumor surfaced that ECB’s Weidmann had resigned. Weidmann is the Bundesbank representative to the European Central Bank and has openly opposed the ECB’s OMT bond purchase program. The German stock market dropped more than 1% and EURUSD fell to test the 1.3284 support line on the release of the rumor. Some of the downward pressure was calmed when the Bundesbank called the rumor ‘garbage’.
The Euro erased all of the losses and rose back towards 1.3375 when the ZEW reported the highest economic sentiment in 2.5 years in the January survey. The ZEW predicted that the Bundesbank will revise its German growth forecast. EURUSD resistance could be provided by an 11-month high recently set at 1.3404, while the broken resistance line at 1.3284 could continue to provide support.
The European Union finance ministers are currently meeting in Brussels. They are expected to continue discussing the single banking supervisor. In last night’s meeting of Euro-area finance ministers, they agreed to deliver the next 9.2 billion Euro aid payment to Greece. Also, ministers said they made progress in talks about ESM direct recapitalization of struggling banks. Also, Dutch Finance Minister Jeroen Dijsselbloem was elected the new head of the Euro-group.
In the UK, BoE Governor King will speak tonight, many are expecting him to say something related to the UK GDP for Q4, which will be announced on Friday. Tomorrow morning, PM Cameron will give his delayed speech about UK ties to the European Union. Many are expecting him to announce a referendum on the possibility of withdrawing from the EU.
In Spain, bills were sold for 2.8 billion Euros, well above the 2.5 billion maximum target. 6-month bills were sold for 0.888% yield versus 1.609% in December. The Euro moved slightly higher following the sale.
The Bank of Japan announced a new 2% inflation target before the start of the European session. Japan Economy Minister Amari said it won’t be easy to achieve the 2% inflation target, while BoJ Governor Shirakawa said the bank aims to achieve 2% inflation as quickly as possible, but the economic impacts of the currency rate must be monitored.
EURUSD Daily: January 22, 2013
Chart created by Benjamin Spier using Marketscope 2.0
--- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .
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