By: Barbara Zigah
The common currency Euro is in a holding pattern in Asian trading today, as investors await the outcome of today’s ECB meeting. Yesterday, the Euro staged an impressive reversal from the 11-week trough against the U.S. Dollar, and marked the largest 1-day gain in the past month.
Much of the credit is given to investors who are trimming their short positions as they speculate on possible ECB action to combat the Eurozone’s fiscal woes. As reported at 2:23 p.m. (JST) in Tokyo, the Euro was trading against the greenback at $1.3105, off from yesterday’s better than 1% gain when the common currency traded at $1.3183, and well above the 11-week trough established just the day before.
One economist in Japan warns that he doesn’t see the ECB announcement, which is due at 12:45 p.m. (GMT), containing any ground breaking news, as there is no definitive target. What analysts hope to hear is that the ECB will stop their liquidity withdrawal plans, and in fact, put additional liquidity measures in place. He commented further that it was a difficult position for the ECB to be in, as they need to find a balance between countering the debt crisis yet ensuring that there is no balance sheet expansion.