Euro Rallies on Draghi’s Speech

By GG Analyst in Reviews 0 Comment

EUR/USD

Draghi, the head of the European Central Bank, decided not to change the policy. At the ECB’s regular meeting it was decided to keep the main refinancing rate at 1%. Apparently, the reason was that the economy is mainly going in line with the preceding forecasts. We remind that these forecasts promised “a mild recession”. The possible deterrent is the fact that the previous easing in November and December and the inflation rate exceeding its target level of “just below 2%” haven’t taken a full effect yet. It’s remarkable how energetic Draghi was, urging politicians to engage in immediate resolving of more…

Finally European Leaders Have Turned Their Eyes on Labour Market Issues

By GG Analyst in Reviews 0 Comment

EUR/USD

The single currency fell to 1.2662 yesterday, which is 5 points below the previous local minimum. These sales were caused by a number of reasons. First, data on annual estimates of GDP growth in Germany were released yesterday. Although they coincided with the forecast of growth by 3.0%, a more detailed statistical analysis has suggested that German GDP declined by about 0.2%in the fourth quarter. This signal is not a favourable one, as Germany was often the engine of growth. In addition, there came out the final data on Eurozone GDP for the third quarter. The statistics were unexpectedly revised lower. more…

Fitch: Italy Poses a Threat to the Eurozone

By GG Analyst in Reviews 0 Comment

EUR/USD

Yesterday Fitch Ratings voiced its traditional commentary on the situation in Europe. The agency’s spokesman said that the ratings of Spain, Italy, Belgium, Ireland, Slovenia and Cyprus might be lowered and also called Italy the country posing the greatest threat to the integrity of the euro area. The rating of France, as the agency claims, is unlikely to be reviewed this year. Sarkozy must have wiped the sweat off his brow. Italian affairs are by far more complicated. The country has a very large national debt (about 2 trln), which requires constant refinancing. Already in 2012 the country has to generate more…

Does politics drive the markets instead of economy again?

By GG Analyst in Reviews 0 Comment

EUR/USD

Merkel-Sarkozy meeting turned out not so frustrating as feared by many. However, it is early to talk about success yet. After two-hour talks the leaders of the two largest European economies noted a “rapid progress” in negotiating the extent of fiscal compact. Moreover, as Merkel put it there are chances to come to a certain agreement already by the end of January. Sarkozy,however, was more reserved in his comments, pointing that the agreement, which will have the constitutional power for fiscal discipline, has to be issued by March. Any certainty is positive for the euro. However, as before the main problem more…

Strong Data on US Labor Market Spur Demand for ‘Safe’ USD

By GG Analyst in Reviews 0 Comment

EUR/USD

Friday’s data on the U.S. labor market surpassed everyone’s expectations and once again proved that the U.S. currency can be a good choice to save money at this unstable time. The U.S. payrolls rose by 200,000 in December, the unemployment rate fell from 8.7% to 8.5%, average weekly hours increased from 34.3 to 34.4 and average hourly earnings grew by 0.2%. Manufacture also demonstrated a good increase in the number of jobs – 23K against the average 10K during the previous six months. Manufacture is the heart of economy and though making a rather small contribution to GDP (form 15% to more…