Wearied after the rally

By GG Analyst in Reviews 0 Comment

EUR/USD

Last week abounded in heavyweight economic events, and the current one promises to be even more nervous. Draghi pledged to do his best to protect the euro. Already on Thursday he will have this opportunity when announcing the decision on the ECB’s monetary policy. Now the most probable turn of events is that the CB will buy bonds of ESM/EFSF. However, there are a few forecasts that suggest the rate cut. It’s worth mentioning that the cut of the official bank rate will lead to the negative rate on the ECB’s deposits. This means that the banks will have to pay more…

Bernanke disappoints, corporate reports inspire

By GG Analyst in Reviews 0 Comment

EUR/USD

Bernanke didn’t put forward any proposal to the markets, but the latter weren’t much upset because of that.  Addressing the Congress with the Semiannual Monetary Policy Report, the Fed’s head highlighted rather gloomy perspectives of the American economy, but kept the tone of careful scrutiny. His speech was rather retrospective and alluding to the previous commentaries of the CB than prospective, that is pointing out the future of the policy. Remember that at the June meeting FOMC decided for the extension of Operation Twist (exchange of short-term bonds for long-term bonds) before the end of the year. Then in the June more…

Short covering in EUR before Bernanke’s speech

By GG Analyst in Reviews 0 Comment

EUR/USD

The single currency was on the decline yesterday morning, but the news from the USA once again reminded us that the situation across the Atlantic is also rather gloomy. The pressure over the euro has been provoking the change of the interest rate differential after the ECB cut the rate down to 0.75% at the beginning of the month. That made the euro one of the weakest currencies, forcing it to fall against most of its competitors. Most likely, the decline in the euro/dollar from 1.2260 down to 1.2175 in the morning hours yesterday was caused not so much by the more…

Small Twist

By GG Analyst in Reviews 0 Comment

EUR/USD

The Fed managed to surpass the market expectations. Yesterday the FOMC announced that it would purchase the Treasury securities with remaining maturities of 6 years to 30 years and sell or redeem an equal par value of Treasury securities with remaining maturities of approximately 3 years or less. There is about $267bln of such bonds on the Fed’s balance. The first round of the programme consists in the redemption of 400bln and was to be finished by July. Yesterday’s decision is accounted for by a rather weak economic dynamics over the last few months: job growth has slowed down, spending has more…

QE, Twist or nothing?

By GG Analyst in Reviews 0 Comment

EUR/USD

Those, who ventured to stake on risk yesterday morning, must have been generously rewarded in the evening. Though at the end of Monday’s trading the single currency sank to 1.2550, already yesterday evening it found enough strength to test the 1.27 level. Today’s quotes remain close to this mark. The Fed’s meeting is ahead. In the last few days it has been widely rumoured that the FOMC will react to the weak market data with another round of Operation Twist. The major advantage of such steps over the additional purchases consists in the absence of any inflationary aftereffects. The fact that more…