Now that the US debt ceiling and budget issues are off the short-term radar, currency traders have returned to force the EUR/USD currency cross higher.
Tuesday’s delayed US non-farm payroll figures have once again been digested as ‘bad news is good news’. The worse-than-expected data has inferred that any chances of the US QE process being tapered in the short term are reduced, and that the supportive $85 billion monthly boost that predominantly finds its way to equities will remain in place. This continuing process of printing cash is fundamentally weakening the US dollar, while at the same time the gentle recovery taking place in the EU is to an extent reliant on the ongoing assistance of the US Federal Reserve to help prop up equity markets.
Today marks the start of the latest EU economic summit and once again Brussels will host Europe’s finance ministers as they try to map out a way forward. Although there are no major issues penciled in for discussion, you can never tell what will materialise when you get so many European decision-makers in the same room.