EUR/USD sits at 1.2200 as European trade gets underway, pretty much where North America closed out Tuesday with Asia consolidating recent euro losses. Watching developments yesterday was akin to watching a train wreck. Germany’s move to ban naked short sales of euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany’s 10 leading financial institutions has been seen as a sign of desperation and duly punished.
At the same time Germany’s coalition government is pushing for a global financial transaction tax or financial activities tax, hardly helping risk sentiment. A financial transaction tax would put a tax on sales and purchases of financial products while a financial activities tax would be applied to financial institution’s profits and bonus payments for executives.
Nothing really in way of euro zone data today:
09:00 GMT: Euro zone construction output for March
European stocks set to open sharply lower.
Sovereign buying and periodic bouts of profit-taking euro’s best chance today in a market set firmly negative toward the single currency. Interestingly Europe had been showing the greatest inclination to embrace risk in the early part of the week. Will be interesting to see what they make of yesterday’s developments.