Thursday, 18 Nov 2010

Talk of EU Loans for Ireland Spark Euro Rally

During the morning hours of the European trading session the euro was stronger following negotiations between Ireland and a joint EU/IMF delegation. It appears that Ireland will receive aid worth tens of billions of euros to prop up its fledging banking system.

European officials made it clear that Ireland will receive loans from a joint EU/IMF program. It remains to be seen if the loans will come from the European Financial Stability Facility, the 440 billion euro mechanism to support debt ridden European nations.

Following the EU report the EUR/USD is trading higher at 1.3650 after opening the day at 1.3586. The EUR/CHF is up at 1.3450 from an opening day price of 1.3439. The EUR/JPY is up at 113.72 from 113.16. The EUR/GBP is unchanged at 0.8335.

The pound was also well bid after British retail sales came in as forecasted at 0.5%. The GBP/USD is up at 1.6000 from an opening day price of 1.5905.

Later today traders should be expecting high volatility when European Central Bank President Trichet speaks. His comments should address the Irish banking crisis along with investors' fears of contagion.

Also on tap are US weekly unemployment claims. The report is forecasted to come in at 442 thousand new jobless claims. Should the report be weaker than expected, the EUR/USD upward momentum could continue for the day and the pair could test the 1.3660 resistance level.