Euro Unstoppable

Published by Filipe R. Costa on Thu, 17/01/2013 - 11:28 in

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strong Euro

Daily Market Commentary for January 17: The Euro continues unstoppable on optimism about the Eurozone while the latest indicators point to a weaker Germany. Can this trend last?

The rise in the Euro is a major blow to many European countries which are trying to change their economy from consumption-driven to export-driven as austerity measures are depressing internal consumption. With a strong Euro it will certainly be much more difficult to export. Germany is already suffering from it. Austerity measures across Europe may be at stake, as any cuts in salaries will be offset by a rise in Euro if the ECB does not intervene to avoid further upside.

With the fiscal cliff and debt ceiling debates in my mind, I’m a seller of the Euro at these levels since a risk rally will certainly result in a massive Euro drop.

Markets continue on the upside but with much less steam than a few days ago. the FTSE is sitting around 6,100 and showing weakness during the morning. US markets are expected to open mixed.

Gold has been stabilising around $1,680. Investors aren’t able to decide between buying or selling as by one side economic data has been better than expected but by other side the massive central bank cash injections increase the appetite for gold.