ECB’s Support of Debt Markets Triggers the Euro Selloff

By GG Analyst in Reviews 0 Comment

EUR/USD

The single currency got a back-blow in yesterday’s U.S. session. Its movement from 1.3070 to 1.29 just in a couple of hours was mainly connected with the fact that the yield of the two-year German securities fell below the U.S. yields of the kind. Yesterday the German two-year bond yield made 0.17% against 0.24% a week earlier. The American bond yields haven’t decreased much over the week, going down from 0.28% to 0.27%. In general, this means that the market is expecting further rate cuts by the ECB. Theoretically, it is reasonable, but the situation has formed not in one day more…

Santa is Draghi

By GG Analyst in Reviews 0 Comment

EUR/USD

Wanted important news?  Here it is. Yesterday Mario Draghi sparked off the rally on stock markets by the announcement about issuing three-year loans on bonds of troubled countries to banks. Now large hedge funds are placing their stakes on the new kind of carry trade: borrow money at a 1% interest from the ECB and purchase “risky” bonds. As a result the euro has started to grow from 1.30 and is now trading above 1.31. It looks like a significant shift after several sessions of listless trading. On this news yield on three-month Spanish bills has collapsed from 5.11% to 1.74%. more…

In the absence of big news currencies are trading around key levels

By GG Analyst in Reviews 0 Comment

EUR/USD

The single currency continues fluctuating in a narrow range. While there is no news the euro holds close to 1.30 as market participants are unwilling to trade without new signals. The interview of the ECB’s President Mario Draghi to the FT and his yesterday’s speech reaffirmed that the Bank refuses to make significant purchases of troubled countries’ bonds, but at the same time is going to take certain measures to maintain the Eurozone’s integrity. On the whole this should be perceived as readiness of strong regional economies to increase their contribution to the bailout of troubled countries in order to get more…

Draghi dragged the euro down

By GG Analyst in Reviews 0 Comment

EUR/USD

Mr. Draghi bitterly disappointed the financial world on Thursday. Yes, the key interest rates were lowered by a quarter of a point to 1 percent. But, alas, there’s no “shock and awe” over the troubled countries’ bond purchases. There hasn’t been even a single attempt to play with the laws and find some loophole. ECB is perseveringly sticking to its guns: “We have a treaty and Article 123 prohibits financing of governments. It embodies the best tradition of the Bundesbank. We shouldn’t try to circumvent the spirit of the treaty.” After that statement markets immediately went down and the demand for more…

Rising stakes for the summit: S&P is threatening to cut the ratings of almost all EU countries

By GG Analyst in Reviews 0 Comment

EUR/USD

S&P is threatening to lower the ratings of almost all EU countries and many banks of the region in case ratings of the Euro-Zone countries go down. Stakes on this summit are very high. But now there are some doubts about its successful outcome. Newspapers with reference to some governmental sources say that Germany will oppose an early launching of the additional bailout funds that we spoke about yesterday. Germany assigns primary importance to the fiscal discipline and agrees to come to the rescue only if it is observed. Again and again German politicians make the same mistake: trying to gain more…