The Euro is now trading higher against the US Dollar for the fifth straight day, as excitement and optimism has been building ahead of today’s meeting of European Union finance ministers. Traders seemed to be slightly surprised by comments ahead of the meeting that the a deal on ECB oversight over all banks could be made as soon as today. That surprise drove EURUSD from 1.3050 to 1.3075 during the European session thus far.
The Swedish Finance Minister Borg said that a compromise could be made today, and his optimism was echoed by his French equivalent Moscovici, who said that France seeks ECB oversight for all banks. However, the optimism was counterbalanced by German Finance Minister Schaeuble, who said that an ECB supervisor over all banks will have trouble getting approval from the German parliament, and he said that the ECB should be able to chose which banks it covers.
So, clearly we see a slight divide over the amount of banks the single supervisor will be able to cover. Optimism from France and Sweden should be taken with a recollection of the certainty ahead of the first meeting of finance ministers on the issue of Greek bailout payments; the ministers were forced to schedule a second meeting when the first one didn’t come to an agreeable solution. Here too, please remember that the outcome of the meeting is still uncertain.
European Central Bank member Nowotny also spoke today, he predicted that the southern Europe economies will detract in 2012 and 2013. He also mentioned that yields are too high in the periphery and too low in the core.
There were only a few economic releases during the European session. The UK PMI for construction fell back below 50.0 in November, following the previous month’s expansion in activity. Euro-zone producer prices beat expectations with a slight rise in October. Neither event significantly affected trading.
In forex markets, EURUSD might now find resistance by the 2-month high at 1.3139. Support could now be provided by the key 1.3000 figure.
EURUSD Daily: December 4, 2012
--- Written by Benjamin Spier, DailyFX Research