The euro recovered ground lost against the US dollar yesterday, as the march higher from the late-July lows continued.
It appears that euro bulls are willing on their date with the German constitutional court, despite the possibility that the learned judges might upset all the plans put in place over the past few months. Last night a German MP filed a request for the court to delay its ruling on Wednesday, saying that the bond-buying programme announced last week by the ECB meant that the court should take more time to study the situation. However, the court rejected this and will go ahead as planned tomorrow, but quite why this is a positive for the euro is difficult to understand (even though it prevents further waiting on our part).
Politicians of all hues seem breezily confident that the court won't look to upset the delicate apple cart that is the eurozone crisis, and the last such ruling proved to be a damp squib, with the court ruling that the EFSF did not breach the German constitution. However, it should be noted that Morgan Stanley's strategy team, which contains a significant number of Germans, thinks there is a 40% possibility that the court might rule the fund to be in breach of Germany's constitution. This might not mean the end of the 'Draghi plan' announced last week, but it will certainly throw a large spanner into the works.