Fewer and Fewer doubts: QE will kick off in September

By GG Analyst in Reviews 0 Comment

EUR/USD

How capricious the markets are! On Friday Bernanke expressed his grave concern about the current state of affairs in the labour market. In fact, formally this sphere is hardly the most troubled one in the USA. So it is just a political trick, a kind of attempt to inject another portion of adrenalin in the economy before the elections. It is meant to assure electors that the present government has done enough to stimulate the economy and is now busy with other, more understandable for the electorate, issues instead of rescuing the banks or housing market, which makes less than 10% more…

ECB’s bazooka should be more powerful than Fed’s one

By GG Analyst in Reviews 0 Comment

EUR/USD

Though neither the Fed nor the ECB have decided on whether to expand their balance sheets or not, the markets already see it as a settled thing for both the CBs. Yet, Europe needs asset purchases much more than the USA. Provided the ECB and the Fed followed the same rules to help their economies (or are ruled by same people), we would see a much bigger decline in the euro. For comparison, the EU economy has shrunk by 0.4% against the level of the previous year, while the US economy demonstrates a 2.2% growth. The unemployment rate in the euro more…

Still out of trend

By GG Analyst in Reviews 0 Comment

EUR/USD

Friday ended with quite an unexpected drop of the euro. As a result, last week’s performance looks rather puzzling. On Wednesday the single currency tried to break below the support line of the upward channel. However, already on Wednesday the powerful spurt upwards made it clear that the fall was false and that the purchases of the pair on the dips could be resumed. But it is not all that simple. On Friday, after a fruitless attempt to hit 1.24 (the highest point reached was 1.2381), EUR/USD reversed down and at some point hit the low of 1.2288. By now the more…

Weakness of the periphery stops growth in EUR

By GG Analyst in Reviews 0 Comment

EUR/USD

The relatively good statistics from the core EU countries didn’t manage to outweigh the slowdown in the periphery. Despite the stronger data from the biggest economies of Germany and France, the GDP of the whole eurozone shrank by 0.2% according to the average estimate. Against the level recorded in the same quarter of the previous year the decline made 0.4%. It hasn’t been a big surprise, but was still enough to shift the market pendulum towards sell-offs of the single currency. From the daily highs of 1.2385 it sank down to 1.2315 by the beginning of the Asian session. But the more…

Suffering manufacture

By GG Analyst in Reviews 0 Comment

EUR/USD

The Fed preferred not to rush headlong into the fight. Yesterday’s commentary highlighted the same disappointing aspects like slowdown in the employment growth, high level of unemployment, low spending, depression of the housing market and pointed out the same favourable processes like larger business investments and inflation slowdown with steady inflation expectations. Interesting enough, but the committee mentioned that with such growth rate the return to the normal employment level would take too much time. The final statement about the FOMC’s intention to provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions more…