EUR/USD Dec 3 – Higher as German Parliament Gives OK

EUR/USD continues to move upwards, as the pair has crossed above the 1.30 line. The euro has looked sharp in recent trading, gaining about one cent in the past week. Market sentiment was buoyed over the weekend as the German Parliament gave their approval to the latest aid package for Greece by a large majority. This paves the way for Greece to receive a total bailout worth 44 billion euros. In economic news, Spanish Manufacturing PMI rose to its highest level since September 2011. Euro-zone finance ministers are meeting in Brussels today to discuss details of the Greek aid agreement. In the US, today’s key release is ISM Manufacturing PMI.

EUR/USD Technical

• Asian session: Euro/dollar pushed upwards, touching a high of 1.3047. The pair is steady in the European session.
• Current range: 1.3030 to 1.3080.

Further levels in both directions:  

• Below: 1.3030, 1.30, 1.2960, 1.2880, 1.28, 1.2750, 1.2690, 1.2624, 1.2590, 1.25, 1.2440, 1.2390 and 1.2250.
• Above: 1.3080, 1.3140, 1.3170, 1.3290 and 1.34.
• 1.3030 is providing weak support. 1.30 is stronger.
• 1.3080 is the next line on the upside.

Euro/dollar higher as German Parliament approves Greek deal – click on the graph to enlarge.

EUR/USD Fundamentals

• 8:15 Spanish Manufacturing PMI. Actual 45.3 points. Exp. 44.0 points.
• 8:45 Italian Manufacturing PMI. Exp. 45.9 points. Actual 45.1 points.
• 9:00 Euro-zone Final Manufacturing PMI. Exp. 46.2 points. Actual 46.2 points.
• All Day: Eurogroup Meetings.
• 14:00 US Final Manufacturing PMI. Exp. 51.7 points.
• 15:00 US ISM Manufacturing PMI. Exp. 51.5 points.
• 15:00 US Construction Spending. Exp. +0.5%.
• 15:00 US ISM Manufacturing Prices. Exp. 54.3 points.
• All Day: US Total Vehicle Sales. Exp. 14.8M.

For more events and lines, see the EUR/USD

EUR/USD Sentiment

• German parliament approves Greek deal: The agreement over Greece’s debt passed a major hurdle on Friday, after German lawmakers overwhelmingly approved the deal, by a vote of 473-100. The agreement includes a debt buy-back scheme and an interest rate cut on loans to Greece. However, the deal does not forgive outright Greek debt owed to Germany and other EZ members. The approval by the German parliament clears the way for Athens to finally receive the 44 billion euro bailout package agreed to by the troika.
• Eurogroup meeting over Greek buy-back: With German appproval in hand, the Euro-zone finance ministers meet in Brussels today to discuss the terms of the Greek debt buy-back. The buy-back is a critical component of the Greece debt agreement which was hammered out between the IMF and the EU last week. The agreement calls for Greek debt to be slashed to 124 per cent of GDP by 2020. The buy-back must be completed by December 12, to allow the troika to move ahead with the first installment of aid to Greece on December 13.
• Cyprus next in line for bailout?: Greece will be in the headlines as the Eurogroup meets in Brussels, but the EZ finance ministers will also be discussing possible bailout for Cyprus. Under a draft MOU, Cyprus would receive 10 billion euros in aid to refinance its banks, which have been badly hurt by the euro-zone debt crisis. No final agreement will be made prior to an audit of Cypriot banks,which should be completed in the next few weeks.
• Euro enjoys strong November: Despite delays over the Greek bailout package and plenty of disappointing economic data out  of the euro-zone, the euro has enjoyed recent success against the US dollar. EUR/USD has climbed over three cents since mid-November, as the euro has now crossed the important 1.30 line. The pair could make further inroads if the US fiscal crisis is averted, as the appetite for non-US assets would increase.
• US lawmakers talk tough on fiscal cliff: Gearing up for a tough fight on Capital Hill, Republicans and Democrats have employed some tough rhetoric over the fiscal cliff. The Democrats have demanded $1.6 trillion in additional taxes over the next 10 years, with higher taxes on those earning over $250,000. The Republicans, who oppose tax hikes on the wealthy, want to see more spending cuts, and have offered $800 billion in new tax revenue.  The markets are hoping that the politicians will find a compromise and avoid a crisis which could threaten the fragile US recovery. However, both parties are likely to continue talking tough for a while yet.

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