European Session – Quiet markets as all eyes on Eurogroup

Selena Nicholas, XM Investment Research Desk


Most major pairs traded in ranges today, as focus remained on the Eurogroup meeting that was taking place. The terms of Greece’s bailout deal are still being discussed yet an agreement is not expected to be reached today. The consensus is for a deal by the end of this week.

The market’s focus shifted temporarily to the better- than- expected European releases today. The Eurozone’s trade balance in December 2014 gave a €24.3 billion surplus, compared with a €13.6 bln surplus in December 2013. This was a record high and was helped by an increase in exports due to a weakening euro.

The single currency rose after the data but it was already trading lower than the European session open price of 1.1416 and it headed lower throughout the session as focus shifted back on Greece.

Meanwhile, the euro traded at its highest level against the Swiss Franc since the Swiss National Bank abandoned the exchange rate cap last month. EURCHF hit a high of 1.0644.

The dollar traded a small range against the yen, and touched a 1-week low of 118.35.  The yen maintained strength today after important economic data out of Japan. The nation’s economy pulled  out of recession in the last quarter of 2014 to expand by 0.6% in Q4.  This was less than the 0.9% expected but markets reacted positively and the Nikkei rallied to an 8-year high, to close at its highest level since July 2007. The markets do not see the data being weak enough to push the Bank of Japan to expand quantitative easing at its meeting this Wednesday. This helped support the yen.

The Australian dollar moved little today, keeping above the 0.7760 level. The next risk event for the aussie will be Tuesday’s RBA monetary policy minutes of the February meeting, when the Bank cut the cash rate for the first time in 18 months to 2.25%. However, some analysts do not expect any surprises in the minutes since RBA governor Glenn Stevens already gave a detailed semi-annual testimony to a parliamentary economic committee on Friday.