The ECB meeting had drawn more than enough speculation ahead of the rate verdict (12:45 GMT) but the early Wellink comments cemented the focus on this central bank theme. The hawkish comment that "current monetary relations too loose" highlighted the belief that a 25bp hike is the only real likely outcome from the meeting and such a result remains priced-in.
As a result dealers now look to the accompanying press conference for more hawkish rhetoric from Trichet. Kicking off at 13:30 GMT the President will need to reaffirm his vigilance if the Euro appreciation is set to continue into the year-end. Any sign of data dependence will hurt the Euro as the speculation of lower pricing pressure in the Euro Zone into 2007 & 08 resists.
Dealers see 1.3250 as the key intraday downside trigger while the sub-1.3275 stops are protected ahead of the verdict by 1.3280 support. More stops are seen below 1.3250 while on the topside any break above 1.3350 will then turn the attention to the 1.3400, 1.3425 & 1.3450 option barriers. Option traders also note large 1.35 expiries intraday.
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