Despite quiet trading the euro is higher against the US dollar and Japanese yen as risk appetite was given a small boost by stock market gains. Traders are now looking ahead to the G7 meeting in Rome – probably chosen by the wives and girlfriends (aka WAGs) who can also indulge in a light bit of retail therapy along the Via Del Corso.
The market view is that forex will not be at the top of the agenda as there are “more pressing issues to be discussed” not least the current situation and the spectre of protectionism.
The British Pound and the comdollars, ie Canadian and Aussie Dollars also managed to recoup most of their losses against the US dollar and yen. However, market players consider the recovery in the euro and pound a short term technical correction and warned that both the British Pound and Euro could fall further given the weak global outlook and continued stock market volatility. The danger for the euro is the continuing tensions within the Eurozone and the debt levels of Portugal, Italy, Greece and Spain – now unflatteringly referred to as the “PIGS” Market fear continues to push into safe havens which favour both the dollar and the yen.
ECB President Jean-Claude Trichet did say on Thursday that he welcomed comments by new US Treasury Secretary, Timonthy Geithner that a strong dollar was the US’s best interests.
