Euro Aided By Constitutional Court and Rumors on China Currency Move

News is that the German Constitutional Court has rejected efforts to block Germany from participating in the guarantees that are a critical part of the Stabilization Mechanism.  

While many expected such a ruling, there was a risk that may have weighed on the euro sentiment.    This decision coupled with the unlimited 3-month funding by the ECB for the next several months is encouraging short covering.

There are also some rumors that China may move on its currency before June 24 that may also be helping the euro trade higher.  Given the recent wage hikes, and the uncertainty about the outlook for Europe, and the new threats from the US Congress, it seems unlikely.  Recall the rumors and speculations of an imminent move by China earlier this year proved for naught.  This time also sounds suspicious. 

7 Comments
  1. Bob_in_MA says

    A currency move by China sounds absurd since they’ve just had a 20% de facto appreciation against their largest trading partner.

    1. Edward Harrison says

      I was on BNN this afternoon suggesting the China – US trade dispute was on the back burner for now. But, I didn’t see Schumer and Geithner’s comments. In general, I think the Chinese are less likely to move the more rhetoric you hear from the US. I see a token move as more likely than you or Marc Chandler seem to. But the Geithner/Schumer rhetoric makes that less likely.

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