London Session - October 20, 2009 6:00 AM

EUR/USD reached a high of 1.4994 in Asia but, while tantalisingly close, has lacked the incentive to push through the psychologically important 1.50 level. Unsurprisingly, the Ecofin meeting provided a platform for ECB President Trichet to reiterate support for the US Treasury’s strong USD policy. Such comments have arguably slowed the pace of the gains in EUR/USD but, while the EUR nominal effective exchange rate is approaching the highs of the past year, the market sees no great risk that the ECB will put its money where its mouth is to prevent the EUR for moving higher. As a consequence a break above 1.500 remains likely near term assuming risk appetite holds up. Stocks this morning are trading lower in Europe despite the gains registered in Asia overnight. The dip in risk appetite is supporting the USD for now. The continued flow of US Q3 earnings will likely have a determining impact on EUR/USD this afternoon. Full text »