Currency exchange traded funds pegged to the euro were set to open with a slight decline Monday as weekend meetings between financial officials in Europe produced no immediate, concrete plan to cool the debt crisis.
“The summit provided very little detail,” said Adam Myers, senior market strategist at Credit Agricole, in a Dow Jones Newswires report Monday. “The two-week risk rally we’ve seen in the market can’t last. I expect to see a correction of the rally by Wednesday as the market wakes up to the fact that the Eurozone solution is another fudge.”
“Sunday’s summit of European leaders produced hints of an agreement while postponing actual decisions for a second meeting set for this Wednesday,” added David Kelly, chief market strategist at JP Morgan Funds, in a weekly outlook. “The key points of the plan have been well canvassed – further, more significant haircuts on Greek debt, a demand that European banks boost their capital, possibly with the use of European Financial Stability Facility funds, and potentially using EFSF funds to partially guarantee sovereign debt.”
CurrencyShares Euro Trust (NYSEArca: FXE) was down 0.3% in premarket trading Monday. The currency ETF rose slightly last week, extending its October rally.
Still, so far there is “little evidence” from the European Union summit that the central issues will be addressed, said JP Morgan’s Kelly.