forex trading outlook today - EUR/USD forecast week december 5 -9 2011 : The single currency once again showed that traders are unsure about getting too bullish ahead of the key event risk over the next five days.
EUR/USD did manage to trade to 1.3521 overnight, and again showed a lack of conviction from the bulls to push the pair convincingly above 1.35 in the short term. Overnight, Spanish, Italian and French bond yields saw aggressive moves lower as France and Spain managed to meet the upper end of their issuance expectations, which supported risk assets. Mr Sarkozy also outlined his strategy for next week’s December 9 summit, which included monitoring other nations’ budgets and potentially imposing sanctions on countries that do not respect the stability and growth pact. Tonight the market will be keen to hear what Angela Merkel has to say, although German Finance Minister Mr Schaeuble floated the idea of an off balance sheet fund, however his proposal fell short of joint issuance of bonds (eurobond).
EUR/USD did manage to trade to 1.3521 overnight, and again showed a lack of conviction from the bulls to push the pair convincingly above 1.35 in the short term. Overnight, Spanish, Italian and French bond yields saw aggressive moves lower as France and Spain managed to meet the upper end of their issuance expectations, which supported risk assets. Mr Sarkozy also outlined his strategy for next week’s December 9 summit, which included monitoring other nations’ budgets and potentially imposing sanctions on countries that do not respect the stability and growth pact. Tonight the market will be keen to hear what Angela Merkel has to say, although German Finance Minister Mr Schaeuble floated the idea of an off balance sheet fund, however his proposal fell short of joint issuance of bonds (eurobond).
There is also a positive buzz around trading floors at present after ECB President Mario Draghi signalled that the ECB was open to acting more aggressively, provided European leaders impose the required fiscal discipline. This opens up the potential to see the ECB setting explicit targets for bond yields, and whilst they will continue to sterilise bond purchases (effectively stopping short of QE) the end game is to install enough confidence in the bond market that sovereigns can fund their deficits in 2012 at better levels.
Traders will also be looking at tonight’s US non farm payrolls with expectations of 125,000 jobs created in November. US data has been steadily improving and has rightly taken a backseat to Europe, but it must be said that expectations are high, so unless we see a number above 125,000 look for EUR/USD to attract sellers.
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