Those following the EURUSD may be surprised by the rather violent spike higher in the past few minutes. Don't be: it is just the same old European unfounded speculation repackaged and regurgitated as headlines, in this case the following:
- EU SAYS NO SOVEREIGN GUARANTEE NEEDED FOR DIRECT ESM BANK FUNDS
Or, for those whose event memory has a one week cutoff, the exact same thing that the Euro summit from June 28 "concluded" sending the EURUSD higher by 200 pips, only to see it crash to 2 year lows in the week following after Germany made it clear this was not really the case. Turns out it is not really the case this time either:
- Details of how the future system will work remain to be negotiated: Commission spokesman Simon O’Connor
Cue responses from Finland, Holland, Slovakia and maybe, just maybe Germany, all of whom agree to disagree, and some of whom even demand collateral even for just EFSF borrowings.
In other words: the EU just resaid what it said originally 10 days ago, while leaving the detail void just as it did at the summit when it announced the MOU. No matter: the algos fell for it an covered to the tune of at least 50 pips. Mission accomplished. Sadly, halflife in thgis particular case: 10 minutes.