Archived IMT (2009.03.09)

The breaking news of the merger between Pharma giants Merck and Schering-Plough is a classic case of market-boosting M&A news that overwhelms the prevailing macro-economic and market dynamics, particularly during a calendar week light on economic data. Typically, such situations are positive for risk appetite, hence, the broadening declines in the Japanese yen already under way, accompanied by a rebound in US equity futures. EURGBP rallies by 100 pips, surpassing my Friday target of 90.40, now eyeing 90.70 as bad news on the UK banking front resurfaces anews. Equity bulls and yen bears to have a solid start of the week based on today's M&A news, which could be a fresh opportunity for renewed selling ahead.