Today’s meeting of Merkel and Sarkozy is probably the key event for the EUR/USD this week. French President Nicolas Sarkozy and German Chancellor Angela Merkel are going to meet in Berlin to craft a master plan for rescuing the debt plagued eurozone countries. The talks will be followed by a joint press conference. European Union President Herman Van Rompuy said “We’ll put this crisis behind us, but it has taken longer than we hoped for. We often acted a bit late and our decisions were often a bit too weak. But in most cases, we’ve worked in the right direction”.
However, leaders are struggling to persuade investors they can contain the risk and assure the euro’s survival because they couldn’t bring any solid and comprehensive solutions so far. This crisis began in Greece around two years ago and has moved to the euro area’s core. Forex market participants think that Sarkozy and Merkel meeting will not produce any meaningful solution to the eurozone sovereign debt crisis.
Currency strategist at Bank of New Zealand, Mike Jones said “We’re going to see more ongoing political noise and that’s really just a distraction from the bigger driver of the euro, which is the relatively weak growth outlook. As long as European growth under whelms, the euro will continue to under perform the U.S. dollar, yen and probably also the rest of the major currencies”. Senior European economist at Barclays Capital Thomas Harjes said “They urgently need to formulate and clearly communicate a vision for a sound and stable euro area that deserves the name fiscal compact”.
Today the Asian stock markets opened slightly lower. Australia’s S&P/ASX 200 index is down 0.14% by the time of typing. The Tokyo Stock Exchange is closed today due to holiday. HANG SENG opened at 18,571.83, previous close was 18,593.06.
EUR/USD is trading at 1.2687 by the time of typing and for today resistances are located at 1.2750 and 1.2858. Support levels are 1.2674 and 1.2627.
GBP/USD is at 1.5404. Resistance levels are located at 1.5467 and 1.5589. Supports are located at 1.5359 and 1.5292.
USD/CHF is trading at 0.9563 by the time of typing and for today resistances are located at 0.9590 and 0.9615. Support levels are 0.9508 and 0.9470.
AUD/USD is trading at 1.0163. Resistances are located at 1.0193 and 1.0263. Support levels are 1.0122 and 1.0040.
There are some important economic data releases today. Swiss Retail Sales will be released at 08:15 GMT. Sentix Investor Confidence report will be released at 09:30 GMT. German Industrial Production data will be released at 11:00 GMT. Statistics Canada will release Building Permits report at 13:30 GMT. BOC Business Outlook Survey is due at 15:30 GMT.