All eyes still on the euro

With a lack of major economic developments due to come out of Asia this week, all eyes are set to remain on the euro. Having just had its best week in six months, hitting a seven-week high of $1.2590 last Thursday and 1.5 per cent up on the week, the euro was steady at $1.2514 with resistance at around $1.2597 this morning, up from Friday’s trough.

The euro saw a great week thanks to hopes that the ECB will make progress in resolving the region’s debt crisis at its meeting on 6 September and news from the Federal Reserve that QE3 could be introduced in the US fairly soon. However, after Germany said that Greece may have to leave the euro next year, hopes are fading again for a speedy resolution to the euro crisis.

Today will see the release of Germany’s IFO business climate index, the most highly-regarded economic indicator in the country. In more bad news for Europe, experts believe the results will show a decline for the fourth month in a row.

Also keeping eyes on Europe in the weeks to come will be the ECB meeting on 6 September, as well as the German constitutional meeting on 12 September. It is expected, therefore, that much of the movement in the markets will be seen between the euro and the dollar in the coming weeks.

The Greenback stood at 81.579 this morning and 76.72 against the yen after dropping to 78.27 last week. As the euro flew high last Thursday, the dollar was in turn at its lowest point in two months of 81.221.