The Eurozone is struggling to manage their finances and the euro is suffering significantly as a result. ECB president Jean Claude Trichet will attempt to calm markets fears on Thursday in the ECB press conference. Attempts to calm the markets concerns over the Eurozone however have been numerous in the past few months and have had little effect. It would seem that the more finance ministers and ECB speakers claim there isn’t a problem, the more the market believes that there is.

Interest rates in the Eurozone will most likely remain on hold at 1% yet most traders will look towards the ECB meeting for rhetoric and tone as to how the Eurozone will deal with liquidity and the EU rescue fund. The expectation is that the rescue fund will be expanded in order to sure up speculation that the fund is insufficient for significant bail outs if portugal and Spain suffer the same ill fate as Ireland in Q4 of 2010. The Euro is expected to trend lower in the next fortnight due to ongoing concerns and faltering interest rate expectations.

The GBP/USD pair has rebounded breaking out of its downward trend. The likelihood is that we will see some consolidation over the next 24hrs ahead of the Bank of Englands meeting on Thursday. The markets widely anticipate interest rates to remain on hold at 0.5% despite elevated inflation levels. The BoE will probably adopt a neutral stance toward future policy and “wait and see” how economic progress unfolds into Q1 of 2011.

A report from the Britich Retail Consortium showed retail spending in the UK expanded at a slower rate than expected, up just 1.5% after expanding 2.8% in the previous month.

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“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”

Regards
Luke Zorab
Torfx cCurrency Dealer

Torfx Currency Dealer