I dont know what is wrong with the site this afternoon as my very lengthy and well researched post about why now is a good time to buy Euro just got wiped!!!! Gremlins in the system!
In essence sterling has spiked massively against the Euro this afternoon and as I have said in other posts in the current climate any opportunity to buy Euros north of 1.17 to me represents a good buy given sterling’s vulnerability. There is the possibility that the ECB may cut rates tomorrow which could weaken the Euro further, however if there are other measures announced such as loosening sovereign collateral obligations required for loans from the ECB, then these may help create confidence that a solution to the Euro crisis can be found.
In my view the EU summit will find a solution (even if it only solves the problem in the short term) to avoid the imminent collapse of the Euro (far too much political and capital investment to let the project fail)- given the noises made by Merkel and Sarkozy, the fact the US Secretary to the Treasury Tim Geithner is in Europe at the minute, and the recent combined action by central banks to improve Dollar liquidity I think the markets will be a little calmer next weak and the Euro will settle down. Therefore I am in the buy now camp….let’s see what happens and whether or not I am eating my hat next week rather than mince pies!
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