Stocks and M&A have dominated European affairs and the FX markets have been forced onto the back burner. Exacerbating this theme has been the pre-central bank calm ahead of the ECB & BoE meetings today. EUR/USD has traded a 1.2700/20 rough range in Europe as US Investment House sales kept the topside capped while sizable bids into the 1.2690"s meant the downside looked equally limited. Dealers also note option expires at 1.2710 and 1.2725 at the NY cut-off (14:00 GMT), that helped gravitate the price action early-on.
Looking ahead, the 11:45 GMT ECB rate verdict is widely expected to see Trichet & Co. hike Euro Zone interest rates by 25bps, taking headline repo to 3.25%. However, much importance is once again being placed on the accompanying statement & press conference at 12:30 GMT. Economists are looking to see how the central bank head will justify any moves while dealers look for an underlying hawkish bias to underpin the Euro appreciation in the medium-to-longer-term. US data sees weekly numbers in the early release with Moskow comments due to hit the tapes at 14:40 GMT.
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