The euro remains under downward pressure as we head into the first weekend of the year, starting the day below the $1.28 level versus the dollar and well below Stg0.83p versus sterling. As well as seeing 15-month lows versus the USD, heavy losses were also seen versus the yen overnight as the single currency continues to be dragged down by concerns about Europe’s debt crisis and its banking sector. With markets not expecting next Monday’s meeting between France’s Nicolas Sarkozy and German Chancellor Angela Merkel to produce much in the …

Eurozone sovereign associated risk remains the dominant theme for forex markets as trading for 2012 gets underway. After falling to a 15-month low of close to $1.29 versus the dollar last week, the euro has regained some composure but remains vulnerable to fresh selling against both the US and GBP. Amid increasing concerns about the outlook for the eurozone economy, leaders in Germany and France announced yesterday plans for a bilateral summit next week, hoping once again to find a comprehensive solution to the region’s debt crisis. Meanwhile, there was …

Sentiment improved over yesterday, helped by a stronger than anticipated German Ifo survey for December, some upbeat US housing market data and a successful Spanish bond auction. US housing starts and permits surged to a one and a half year high in November, reinforcing the view that the US economy will continue to see moderate growth. Spain, meanwhile, managed to successfully auction over €5billion of short terms paper, raising more than it had initially hoped. This pick up in sentiment has helped the euro versus the dollar, with the single …

The euro has started the week on the back foot versus other majors as it continues to be undermined by sovereign associated risks. EU discussions continue at intergovernmental level but markets remain concerned about the lack of near term progress in resolving the region’s debt crisis, potential sovereign downgrades and the likelihood that the eurozone is back into recession. Short covering ahead of year end could provide some support for the euro but at the same time sentiment appears to be increasingly moving against it.
Eurozone finance ministers are expected to …

The euro has started the week on the back foot versus other majors, dragged down by on-going talk of debt downgrades for Europe from Standard and Poor’s, despite the fact that the EU Summit reached a deal on Friday to tighten fiscal rules. The rating agency has yet to give its opinion on the deal and its comments are eagerly awaited. Many are treating the latest deal with caution, in particular given the UK’s opposition to it. According to a poll in the UK Times voters overwhelmingly back Prime Minister …

All eyes will be on today’s ECB policy meeting, with the central bank widely expected to cut interest rates for the second consecutive month. Our forecasts show a cut of 0.25% but we would not rule out the possibility of a more aggressive move. Meanwhile, the post meeting press conference will be watched carefully as markets look for signs of a softening in tone from the central bank with regards to taking an increased role in the region’s sovereign debt crisis. Any disappointment in terms of what the ECB …

After seeing highs of close to $1.35 yesterday, the euro came under selling pressure late in the day and overnight on talk that the US will not participate in plans to boost IMF funds and that the Bundesbank is against using new IMF funding directly for the EFSF. None of the reports have been confirmed but they did play into an already nervous market. Sentiment was also undermined by the announcement from ratings agency S&P that it was placing the sovereign ratings of most of the eurozone (including France and …