The EUR was hit hard early in the European session on a wire report that EU Monetary Affairs Commissioner Almunia said that the Eurogroup will discuss the appreciation of the EUR ahead of this weekend’s G7 meeting. Generally, G7 communiqués bring little reference to fx markets except to stress there is a preference for stability. However, ECB President Trichet recently re-endorsed his support for the US Treasury’s strong USD policy and this is stirring fears that Eurozone leaders are concerned as to the possible detrimental impact of EUR strength on the Eurozone recovery particularly given the very benign nature of European inflation (CPI stands at -0.2% y/y). Full text »
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