FX EUR/USD – Market Outlook

Speculations about a third rescue package for Greece were fuelled once more as Germany’s Finance Minister Schaeuble explained the need for a further package during his party’s current election campaign. According to the “Sueddeutsche Zeitung”, many leading economists believe that this is the only other viable option apart from a further debt cut. The financial aid is most likely to be drawn from the EU Structural Fund and it should aid Greece’s economic recovery as well as supply part of the nation’s budget for debt repayments.

On the other side of the pond, a range of important U.S. economic data for the labour and housing market could confirm that there are signs of an accelerated recovery.  Minutes from the last meeting of the Fed show that the majority of its members agreed on a gradual reduction of the policy of QE. This lead to modest gains for the USD versus its counterparts. However, concerns remain that a reduction of the current monthly bond purchasing program might lead to an exodus of capital into countries who offer higher yields.

The USD climbed 0.1 percent to 1.3340 versus the EUR after having rallied 0.5 percent yesterday. The USD/JPY appreciated 0.2 percent to 97.90 from yesterday’s level.