In US trade, the euro experienced another volatile session, again falling as scepticism mounted over this week’s EU summit.
Overnight we saw traders growing on increasing scepticism that this week’s EU summit will fail to come up with any meaningful measures to shore up the prospects of the EU’s weakest nations. News over the weekend that Greece’s newly elected Prime Minister, Antonis Samaras, and his finance minister (resigned) will both be absent due to health issues exacerbated fears that the meeting would become nothing more than a fruitless talk-fest.
Heading into the summit, Germany remains opposed to any form of debt mutualisation, with Angela Merkel commenting that such measures at this juncture would be ’wrong and counter-productive‘. The ECB's Weidmann also expressed similar concerns, noting that the current proposals for eurobonds, eurobills, and the pooling of risks would only work if member states are willing to give up some sovereignty, an issue that member states receiving EU bailout funds are reluctant to discuss. Unfortunately, the philosophical differences look set to ensure another stalemate is on the cards.
Having ended yesterday’s Australian session around the 1.2525 level, the euro fell to a low of 1.2471 before recovering to close US trade at 1.2504. Upon resuming for Asian trade the euro has rallied slightly to be currently in the mid-1.2520s.