Trouble in Paradise? Finland and Netherlands Block ESM Purchases
THE TAKEAWAY: Finland and Netherlands will block ESM bond purchases -> News possibly shows disharmony after EU summit agreements -> Euro contracts from Friday’s weekly highs
Finland and the Netherlands will block the Euro-zone’s permanent bailout found, ESM, from purchasing bonds in secondary markets. The Finnish government reported this news earlier today despite a decision at the EU summit last week to use the ESM and EFSF to stabilize markets. All Euro-zone countries must agree for the ESM to buy bonds from the secondary market.
The blocking of the bond purchases shows more disaccord than initially thought over the bailout agreements made by European leaders in Brussels. The news could be partially responsible for the steady decline of EURUSD in today’s session, as well as other risk-correlated assets. The Euro slowly fell back from near-1.2700 highs at the beginning of the session, and has repeatedly tested a resistance around 1.26100 as the session continued.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.