Credit: REUTERS/DAVID W CERNYEuro slips 0.1% to $1.1414
Modest move suggests expectations have been met - analysts
Signs of progress can keep euro supported - analysts
SINGAPORE, July 20 (Reuters) - European leaders stood at an impasse and markets on edge on Monday after three days of haggling over a coronavirus rescue plan had yet to produce an agreement.
Diplomats are in a final push on Monday to reach what the chairman of the EU summit described as "mission impossible".
On Sunday a compromise failed when a deal envisaging 400 billion euros in grants was rejected by thrifty northern states, which said it saw 350 billion euros as the maximum.
In early Asian trade the euro EUR=EBS slipped almost 0.3%, but has recovered by mid morning to sit at $1.1414, not far below where it left off on Friday. MKTS/GLOB
Here are analysts' views on the possible outcomes from here and on how investors may respond:
CHRISTOPHER WONG, FX ANALYST, MAYBANK, SINGAPORE:
"There isn't an explicit statement to say if there is a deal or no deal.
"Given that they can narrow down their differences to just 50 billion (euros), markets are somewhat still hopeful of a compromise agreement, though the risk of the deal being called off totally remains...which may suggest that euro upside can be limited in the near term
"Another push-back will dampen sentiment and the euro could reverse its earlier gains towards $1.11-$1.12 levels."
CHRIS WESTON, HEAD OF RESEARCH, PEPPERSTONE, MELBOURNE:
"The failure of euro to really sell off is one indicator of where expectations where. I think expectations were that we weren't going to get a deal at this meeting anyway, but we needed enough in it to give us a belief that there was one coming in August or September.
"This is what we're so used to from Europe...it was always going to be a very controversial programme where they needed to be seen defending the interests of the individual sovereigns. Ultimately there will be a deal and the market knows that.
"I think market expectations have been met. If I held a long euro position, which I know most asset managers do, then I wouldn't be selling on the back of this."
MICHAEL MCCARTHY, CHIEF STRATEGIST, CMC MARKETS, SYDNEY:
"It's clearly not a positive, but at the same time because of the history of Europe and some very active expectations management from the participants, I don't think markets are taking it too hard.
"The euro has come under only modest pressure and I don't think it was a surprise to the market that no agreement was reached over the weekend. The message has been that this will be a potentially difficult and long conversation."
(Reporting by Tom Westbrook; Editing by Michael Perry)
((tom.westbrook@tr.com; +65 6318 4876;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
