Thursday, March 25, 2010

Forex managed fund IMF getting involved

Compared to the fireworks of yesterday and EURUSD's fresh lows in Asia at 1.3284, today's European and US session has been more subdued for the majors; with EURUSD taking the opportunity to consolidate between 1.3300 and 1.3370 without looking that likely to threaten fresh lows. Eurozone M3 growth in February contracted -0.4% YoY, more than the -0.1% expected and a disappointing dip after last month's +0.1% reading. However European data was never going to be the main focus of the day, with markets instead focused on the run-up to the two-day EU meeting in Brussels where finance ministers from across the continent are convening to discuss the options and practicalities of dealing with the Greek crisis. So far, the main bone of contention remains the scope for IMF involvement in any bailout, with Germany's Angela Merkel vocal in her opposition to a solely EU-backed rescue which would probably result in Germany having to foot the bill. As such, she has asserted that the IMF must be involved to share the burden; however notably, this stance contrasts with the view of both French officials and ECB members' comments in recent days. This conflicting stream of rhetoric from different Eurozone camps does little to clarify the current state of limbo in financial markets, and if anything gives the impression that a unified solution will be very difficult to thrash out by the end of a two day meeting. In the meantime, GBPUSD has had a whipsaw day after the bittersweet February Retail Sales figures were released in the morning session. Although this month's numbers smashed consensus estimates with sales excluding auto fuel at +1.6% MoM (+0.6% expected) and sales including auto fuel at +2.1% (0.8% expected); there were dramatic downward revisions to the January figures; with sales ex-auto fuel down to -2.1% from -1.2% and sales including auto fuel down to -3.0% from -1.8%. As traders saw the headline figures hit the wires, GBPUSD spiked to an intraday high of 1.5 [...]

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