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FX Day Trading - 9 December 2011
EU leaders agree imaginary treaty
Britain and Hungary demur
Euro holds its breath
The 28th British Social Attitudes survey was conducted between June and September 2010 and published this Wednesday.
So at last the nation can find out what people thought about things such as traffic congestion (43% see it as a serious problem) and houses (45% are against building more) last summer.
Only a third of people in England wanted to redistribute income, taking from the rich to give to the poor. When asked the same question in Brussels last night, seven eighths of EU leaders thought it was a good idea.
David Cameron was one of the odd men out. Having failed to wring concessions from Merkozy, particularly on the proposed financial transaction tax, he regretfully decided the new treaty was not one he could put before the UK parliament.
The quick fix to Britain's non-participation is that 23 EU members will pretend there is a treaty and pretend to abide by its terms.
News of this I-can't-believe-it's-not-a-treaty only came out in the small hours this morning and spread betting investors in the Far East had no instant opinion as to its significance.
An hour before London opened they seemed to be coming to the conclusion that it was a less than perfect result and not the lifeline so desperately needed by the euro.
Heading into London's opening it was two cents down against the US dollar and one yen lower than Thursday morning's levels. Ominously for sterling, the pound's gains amounted to less than a quarter of a cent on the day.
Not all of the euro's retreat was down to the negotiations in Brussels though. The EUR/USD lost a cent yesterday afternoon during the European Central Bank press conference.
Financial spread betting investors were happy enough that the ECB had lowered its Refinancing Rate from 1.25% to 1%.
They were upbeat when they heard about "non-standard" policy measures aimed at preventing banks from running out of money, such as unlimited three-year loans and lower standards of collateral.
ECB President Mario Draghi's call for "bold and ambitious structural reforms" in Euroland went down well enough too.
But investors did not like it at all when Sig. Draghi explicitly ruled out the idea of European central banks (his own and the individual national ones) using the IMF vicariously to buy Euroland government bonds.
He did not say it was completely out of bounds but he said it would be unacceptable - and against the spirit of the rules - for Eurozone central banks to lend to the International Monetary Fund with that express intention.
First impressions are that EU leaders have not quite shot themselves in the foot by alienating British support (even assuming it was ever offered), but it looks as though they have considerable ground to cover today.
Investors can still see nothing more on the menu than jam tomorrow, a diet with which they are becoming increasingly disenchanted with.
A treaty that dare not speak its name may keep them quiet for a few hours but unless Brussels can come up with something more concrete there will be ructions on Monday morning, if not before.
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'EUR/USD Spreads Lower as ECB Cuts Interest Rates', Article by Moneycorp, last update: 9-Dec-11
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