The criticism about the EU Summit deal was about not solving the current crisis and only proposing very general steps for fighting future crisis. A new report shows that even this deal is in trouble.
Intergovernmental agreements, which substitute a treaty change after Britain’s veto, may be more problematic than earlier thought. This adds tot he pressure on EUR/USD, which fights to hold above critical support.
Matina Stevis at the WSJ reports that senior officials in Europe said that converting the deal into a “watertight legal pact†– not good enough.
Also European Council President Herman Van Rompuy said that this would “complicate the task of implementing new, stricter fiscal rules.
This weighs on the euro, that managed to survive the critical support line of 1.3145 after a positive Spanish bond auction and also by willingness of the German Bundesbank to transfer money to the IMF, under some conditions.
The pair is now at 1.3175, capped by the 1.3212 line it managed to temporarily move above earlier. 1.3145 is critical support after being a low in October – the lowest level since January and the last stop before the psychologically important 1.30 line.
For more on the euro, see the euro dollar forecast.
The markets await the rate decision in the US, that isn’t expected to yield any policy changes in the last meeting of the year, although Bernanke could always surprise.
