Dirty Laundry, A Test For Euro Bulls - The Euro continued it downward move after not being able to hold the 1.40 level against the USD in yesterday's succession. Is this a pause in the Euro's uptrend or the start of a correction? The short answer is it depends. If the lead up to the Friday March 11 meeting of the heads of states of euro-zone nations is quite then this will be just a pause; if however, the French-German axis clash with EU leaders Van Rompuy and Barroso then the airing of their dirty laundry will cause a much deeper correction. That's right it comes down to politics yet again. Friday's meeting is a prelude to the March 24-25 summit which is suppose to produce measures to resolve the region's debt crisis. Meanwhile, the slide in the price of oil has caused safe haven flows into the CHF, Yen, and gold to reverse. The price of oil retreated on reports that Moammar Gadhafi may be looking for a way to exit Libya and after Kuwait's oil minister said OPEC was considering raising output in order to make up any supply disrupted by Libya's conflict. In the UK, the GBP came off after reports showed retail sales declined in February and house prices fell, cutting expectations for rate increases this year. Bank of England policy makers will on March 10. In Asia, the NZD was finally able to move higher after falling for a about a week due to perceptions of interest rate cuts in response to the earthquake. In Canada, the CAD is still trapped inside its recent trading range, needing a catalyst to move it out of the range. Right now the CAD is vulnerable to a further sell off in the price of oil while the market waits for domestic data later in the week. Balance of trade data on Thursday and Friday's jobs data could demonstrate that the Canadian economy has momentum.
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