Week in FX Europe – Another Last Minute Houdini Act from The ECB? | OANDA Forex Blog


 

Despite concerns about Cyprus and an unexpected drop in this month’s German business confidence numbers, the 17-member single currency is rounding off the week trading higher against most of its major trading partners. Many participants still expect the ECB to perform another one of its Houdini acts. Capital Markets remain composed; most likely due to the fact that investors have gotten used to the last minute Euro-solutions. They are clinging onto hope that Cyprus will get a deal done over the next three-days.

In a worst-case scenario – Cyprus having to leave the Euro-zone – some investors are holding on to the belief that the ‘buck’ stops with the island country and no widespread contagion will actually occur. While traders are taking profit on the short EUR positions ahead of the weekend they are also selling their long winning dollar positions accumulated during this quarter. If by Monday and things do actually go “pear-shaped” for the market, any EUR weakness may only be brief as the ECB will be quick to react to calm the markets through their OMT or the ELA programs.



WEEK AHEAD

* USD Fed’s Bernanke Speech
* USD Durable Goods Orders
* USD Consumer Confidence
* GBP Gross Domestic Product
* CAD Bank of Canada Consumer Price Index Core
* EUR Unemployment Change
* USD Gross Domestic Product
* USD Reuters/Michigan Consumer Sentiment Index

Week in FX Europe – Another Last Minute Houdini Act from The ECB? | OANDA Forex Blog

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