EUR/USD fell back somewhat early on Friday, as the rumours persisted that Al Qaeda's nr. 2, Al Zawahari, had been surrounded by Pakistani forces near the Afghan border. Probably some dollar bulls jumped the gun speculating on a capture to sooth short-term terrorist fears somewhat, as this would of course be a major blow for US arch nemesis nr. 1 Al Qaeda…
Although the news of such events kept being postponed, hope was kept alive apparently as EUR/USD in the late afternoon, in the absence of other impulses such as eco data or a clear direction from equity markets, fell back from the 1.2350 zone to the 1.2260 area. It may also be suggested that at the end of the week and exactly as most European traders went home (17.00 CET), any left-over dollar shorts opened up after the Madrid bombings were being closed, helping the dollar rebound, too.
This morning the dollar saw some smaller dollar positive events, with the controversial elections in Taiwan (see USD/JPY) and the news of the death of Hamas leader Yassin, a terror threat to the region. In the mean time, rumours about the capture of Al Qaeda's no.2 Al Zawahari continue. These events/rumours couldn't move EUR/USD sustainably though this morning, but continue to sketch an uncertain and terror ruled environment.
ČSOB Investment Research