WSJ.com is available in the following editions and languages:
Thank you for registering.
We sent an email to:
Please click on the link inside the email to complete your registration
Please register to gain free access to WSJ tools.
An account already exists for the email address entered.
Forgot your username or password?
This service is temporary unavailable due to system maintenance. Please try again later.
The username entered is already associated with another account. Please enter a different username
The email address you have entered is already in use.Please re-enter the email address.
Send me information about more WSJ features
Create a profile for me in the Journal Community
Why Register?
Privacy Policy | Terms & Conditions
As a registered user of The Wall Street Journal Online, you will be able to:
Setup and manage your portfolio
Personalize your own news page
Receive and manage newsletters
Receive and manage newsletters
Remember me Forgot your password?
Digg
Despite some disappointing U.S. economic data, foreign-exchange markets’ hammering of the dollar makes little sense to many commentators who feel the euro ought rather to be in the eye of a storm.
“The fact that Greece and the peripherals are hurtling towards the cliff edge doesn’t seem to have been a factor in recent [currency] trade,” wrote UBS AG strategist Simon Penn rather sniffily Friday morning.
The Royal Bank of Scotland Group struck a similar note.
“The market shrugged off any fears of contagion from Europe and piled aggressively back into the euro,” its analysts wrote. “This is quite telling considering the degree of uncertainty heading into a weekend where anything could happen in Europe.”
Reports of continued Chinese interest in owning peripheral euro-zone bonds is one factor cited as being behind the euro’s poise. This makes sense, of course, but markets seem to be ignoring the fact that U.S. debt is hardly short of buyers either.
This week’s three Treasury auctions were fantastically well received, with interest at the five-year sale the strongest since 1997.
So, despite the current focus on the dollar’s home grown worries, perhaps euro bulls might be well advised not to get too comfy, especially as the end of the U.S. Federal Reserve’s second program of quantitative easing looms next month.
It is sure to mean more volatility and could well see the dollar fight back, according to analysts at Bank of America Merrill Lynch. The market is very long of the euro against the dollar, for one thing and pricing in a lot of near-term monetary tightening in the euro zone compared with the U.S.
How much the end of quantitative easing is priced in, meanwhile, is hard to tell, but to the extent that the debate is now shifting towards U.S. tightening, the risk is that euro/dollar will move lower in the months ahead, according to the bank’s G-10 analysis team.
The euro may be settling into a range between $1.4150 and $1.42 as the market’s look to a shortened week of trade ahead in both the U.S. and U.K. However, Bank of America Merrill Lynch suggests that it could fall all the way back down to $1.32 when the Fed stops the dollar presses in mid-June.
MySpace
Digg
del.icio.us
StumbleUpon
Error message
The Eurozone is biggest economy in the world. Of course it’s going to pan out better than the U.S! WSJ’s Mark Gongloff can bs all he likes about the periphery, but the Euro is going nowhere.
The Source is WSJ.com Europe’s home for rapid-fire analysis of the day’s big business and finance stories. It is edited by Lauren Mills, based in London.
Read Full Article »