Euro Technical Analysis - US Treasury Secretary demanding a blank check for $700 billion
The euro exchange rate is resuming the upmove after only a two-day dip. Normally we expect three days (or more) and indicators were supporting the idea of a bigger dip-but fundamentals trumped the chart. In this instance, the market was expecting Congress to fold faster and not put up such a fuss over a little thing like the US Treasury Secretary demanding a blank check for $700 billion with no oversight and no legal recourse. Congress balked and became the “fundamental." The sentiment persists, however, that once the deal gets done, we should get a relief rally in the equity markets and in the US dollar.
We have seldom seen sentiment in such a delicate state and so sensitive to political nuance.
It’s not going too far to say that the Bush speech, and Bush inviting the presidential candidates to a summit meeting today, was an injection of politics that the market didn’t like. We can’t recall an occasion in the past when something this tangential had such a decisive effect.
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