Week in FX Europe – How will the EUR ever make the turn?

It’s virtually a month and a half until the ‘turn,’ or the New Year to most of us. As traders, we should expect Euro growth concerns, the fiscal cliff and Greece or Spain to dominate the reasons for most of our trading strategies. Until now, the past two months had been influenced by specific carry strategies, directed by core G10 policy makers. Long cheap EM position taking is now beginning to struggle as an outright strategy. How so? Due to the Central Bank policy of racing to weaken their own currency values the market should expect traders to shy away or close out most of the remaining carry positions.

Investors however are more concerned about the now; where the EUR, trading within striking distance of its two-month low, continues to look vulnerable, especially since Greece’s next tranche of financial aid is hanging in the balance. Greek policy makers had been banking on the Euro-finance ministers meeting next Monday to agree on releasing the next tranche of loans. The lack of clarity on how to make Greece’s massive public debt sustainable will probably delay any such announcement. It seems that Euro officials have been going out of their way to reassure the market that there will be no accidental or any other Greek default on November 16 when a large amount of treasury bills come due.

• No QE from BoE
• Merkel Calls for Loss of Sovereign Powers to Save EUR
• Germany Relieved by Obama Reelection
• German Exports Fall in September
• Greek Lawmakers prepare to vote on Austerity amidst Protest
• Market Participants expect more BOE easing actions
• ECB Ready to Buy Bonds as Economy Weakens
• Draghi Reassures Markets ECB can do Unlimited Interventions
• HUF CBank has Room To Move
• Polls show Britons want EU exit
• Greek Statistics Office confirms 25.4 percent unemployment
• Spain Bond Auction Results Push back Bailout Request
• Greek Parliament Passes Austerity Measures
• Draghi: Euro Economic Outlook Not Improving
• ‘Immediate Action’ on UK Economy needed
• Greek Vote on Wed key to prevent Euro Exit
• European Banks Loans suffer biggest Drop Since ’09
• Europe Crisis to last till 2017 – Merkel

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