Super Mario steps up to the plate

More Ken Veksler, 2 days ago08 December 2011 Well we’ve been waiting for this day for a little while now and outside of the all important European Central Bank decision this afternoon today also marks the beginning of the two-day EU Summit, at the conclusion of which apparently Europe will be rescued, problems will all be solved and we can safely settle back in to what everyone thinks will be the Christmas rally to absolve all the sins of the year that is drawing to an end.

Some may call me cynical, while others will have far worse names for me, most of which admittedly are well deserved, but I find it incredibly hard to believe that all of a sudden we’ll see an end to the misery that has engulfed Europe and thus many of the remaining nations and markets. Of course time will tell, but I think too much hope has already been priced in to tomorrow’s outcome and thus it’s almost a case of whatever is officially communicated there should be some sort of sell-off. Of course the depth and breadth of it will depend on exactly what is said.

Back to today’s events...
Super Mario takes centre stage once again and the market is looking for a decisive minimum 25 basis point cut in the cash rate, while there is a big enough contingent out in the market also rather hopefully looking for 50bps. I think our man Mario needs to keep some powder dry, as he’s in for a bumpy new year, thus my money sits on only a 25 point cut.

The Bank of England also announces today, however there should be no change to either the cash rate or Quantitative Easing programme size and thus the Cable should track the EURUSD again today as it has now for the last few months. Of note in the Cable was a rather large M&A flow late in the afternoon yesterday which was all about buying Sterling and selling dollars. It brought the Cable to pretty much where it currently trades and for those that read yesterday’s piece, you’ll know that there are plenty of punters in the market looking to fade this strength right about here.

With regard to the other major pairs, levels from the last few days remain in play as the market dares not put a foot into touch ahead of tomorrow.

Keep those helmets firmly on folks as the ride will likely only get bumpier...
Good luck. Tags: EURUSD, GBPUSD 129 Views 0 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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