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FX Day Trading - 24 October 2011
It will all come together on Wednesday
No announcement after weekend EU summit
But investors are quietly confident for now
The three-line whip for today's parliamentary debate demands that Conservative MPs vote in favour of the status quo with regard to Britain's position in the EU.
But the prime minister's support for as-you-were EU participation might be sticking in his throat after an altercation with Nicolas Sarkozy. At the 13th crisis summit meeting in 21 months, the French president berated David Cameron for his criticism of the way EU leaders had repeatedly fumbled a solution to the southern Euroland debt crisis.
M. Sarkozy reportedly told him: "You have lost a good opportunity to shut up. We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings." Touché.
The spat was typical of a heated meeting that failed to tick enough of the crisis-resolution boxes to make a closing statement worthwhile, even though The Daily Telegraph published the draft of a potential statement five days ago.
Agreement tended to centre on what would not happen rather than what would. Crucially, the European Central Bank will not have a role in boosting the rescue fund, the "haircut" on Greek bonds will not be compulsory, and Greece's failure to repay bondholders will not constitute a default.
As projected last week, a 14th meeting will take place this Wednesday, at which all will be sweetness and light and EU leaders will reach the agreement that has eluded them for two years.
Spread betting investors have been remarkably sanguine about the whole thing. They genuinely expect a workable rescue plan on Wednesday and they are ready to give the euro the benefit of the doubt in the meantime.
That confidence has spilled over into the commodity-oriented currencies and into energy and equity prices, all of which look better this morning than they started Friday. See also commodities spread betting.
The bulk of the movement came on Friday afternoon. Little has happened in the Far East this morning, other than a half-cent advance by the Australian dollar following an improvement in China's manufacturing purchasing managers' index.
There are more PMIs coming out this morning, all from the Eurozone and all, like the Chinese one, provisional figures. Apart from Euroland industrial new orders there are no other data on the agenda until tonight's New Zealand inflation figures.
The parliamentary debate on EU membership could conceivably have an effect on sterling but probably will not, because its result will not be binding.
As for the euro, FX spread betting investors' expectations from the weekend summit meeting have been met almost perfectly. Having been warned there would be no result until Wednesday they cannot even feign disappointment. That is not to say they will be overjoyed but it should make them patient enough to do nothing silly for the next couple of days.
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'FX Spread Betting Investors Await Outcome of EU Debt Crisis Summit', Article by Moneycorp, last update: 24-Oct-11
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