In a week thus far dominated by liquidity premium and a lack of economic fundamental depth, this is a market without a cause. One does not need to look too far in this disjointed U.S. foreign exchange trading week for some concrete excuses; negativity is being exposed on a few fronts this morning. A couple of recent, high profile Portuguese government defections, and a host of other problems, are leaning on the 17-member single currency. The return of the Eurozone debt crisis that’s been dormant for almost a year is very real, with market concerns that Greece too may not have the ability to meet the terms of its international bailout. Already investors have been on edge, worried about the state of the Chinese economy and the possibility of the U.S. Federal Reserve tapering its quantitative easing (QE) program. Throw Europe again into the mix and the bad flashbacks have the potential to become more than just a nagging headache.
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