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 …

As the focus remains on trying to find a comprehensive solution to Europe’s sovereign debt crisis tensions are likely to be running high again this week in the run up to Thursday’s ECB meeting and Friday’s EU Summit. The Summit is expected to put forward proposals for EU treaty changes allowing for greater fiscal union in the euro zone, perceived by many as a crucial part of the solution to the current crisis. The euro was modestly higher overnight, with market sentiment described as guarded following the news of fresh …

The euro is holding on modest gains seen versus the dollar and yen overnight, with optimism that Europe could be finally moving towards comprehensive solutions to its debt crisis leading to a round of short covering. Traders are now focusing on a two day meeting of European finance ministers, which starts later today, to see if the group will provide any further details on plans to beef up the fire power of the regions bailout fund, the EFSF. At summit meetings in late October it was decided to leverage the …

The euro fell sharply yesterday and overnight on the back of poor debt auction results from Germany, as well as talk that the French-Belgian bailout deal for Dexia bank is not viable under its original terms. France may have to carry a bigger share of the costs, putting even further pressure on its credit rating. Meanwhile, Germany was auctioning €6 billion of a 10-year benchmark bond. However, it only managed to get away €3.6 billion of this, a cover of 0.65 times, with the average yield at 1.98%. While the …