Between Bond Sales and Meetings, a Euro Strategy
Here's how to keep your trading focus between the upcoming European government bond auctions and meetings.
Let's see: Tuesday is Eurogroup, Wednesday is Ecofin, and it seems like everyone in the euro zone is selling bonds. "It's an alphabet soup," says Win Thin, senior currency strategist at Brown Brothers Harriman. Meanwhile, of course, the headlines announcing agreements or nonagreements on debt plans will continue.
Under these circumstances, it's not so easy to keep a trading plan in mind. According to Win, a simple idea is best. "If nothing concrete comes out on Wednesday, I think the euro goes back down," he told me. "If we go back to business as usual, I think people will go back to shorting the euro and stocks."
What about the news today that European leaders may be negotiating a new pact? "We're keeping an eye out - but how many times have you heard these vague promises come out of Europe and nothing happens?" he says.
In the meantime, bond yields in the eurozone overall - even including Germany - have spiked sharply higher than those in the other G10 countries, according to an analysis by Citigroup. And the OECD and Moody's are both warning that a solution to the debt crisis is urgently needed.
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Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.
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