EUR/USD Surges as Summit Boosts Optimism of Traders

EUR/USD demonstrated a huge jump today as the European summit has brought some good news, including easing of loan conditions for Spain’s banks and a proposition of direct access for banks to the bailout fund, which should lower debt burden on governments. Previously, traders were very skeptical about the meeting and signs that it may result in some meaningful actions from European lawmakers were a real surprise. The surprise resulted in very positive market sentiment and the euro profited from it. At the same time, data from the United States remains poor, boosting prospects for QE3 and weakening the dollar.
Personal income and spending were below expectations in May. Income rose 0.2%, the same rate as in April, while the median forecast was 0.3%. Spending registered almost no change, while it was expected to rise with the same 0.1% rate (which was revised from 0.3%) as in the previous month. (Event A on the chart.)
Chicago PMI was at 52.9 in June (compared to 59.7 in May) and matched analysts’ predictions. (Event B on the chart.)
Michigan Sentiment index fell 73.5 in June from 79.3 in May, according to the revised report. The revised value was below the preliminary value and market expectations of 74.1. (Event C on the chart.)

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