Source: ForexYard
The upcoming weekend EU economic summit is the event that has captured the headlines but it may be a potential monetary policy move that is on the minds’ of FX market participants. At this time it is unclear what type of agreement France and Germany will come to though investors appear to be approaching the weekend with a bit of optimism given the gains European bourses have booked today.
With the German DAX up 2.80% and the French CAC up 1.80%, the hefty equity gains display a hint of optimism leading into the weekend. This weekend’s EU summit had quite the buildup but France and Germany have yet to come to an agreement and the scheduling of an additional summit this Wednesday to hash out the two nations’ differences regarding the legalities of the EFSF may just be delaying the theory that the two will eventually see eye to eye. Disagreements over the involvement of the ECB in any post July 21st agreement seem to be the largest gap. France is for the inclusion of the ECB while Germany counters with an insurance scheme that could cost France its AAA credit rating.
Despite the uncertainty and lack of an agreement between Europe’s two perennial powers investors are approaching the weekend with a glimmer of optimism. European equities are poised to finish the day with strong gains while the EUR/USD has moved above its recent consolidation pattern. At print time the USD is lower versus the majors. While European matters are getting a majority of the headlines, perhaps a WSJ article that discusses the next possible round of US monetary policy easing is having an impact on the USD?
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