UK and Czechs abandon the “compact”, but markets seem to be doing well with other 25 members joining it

EUR/USD

25 of the 27 EU countries signed the pact over toughened fiscal discipline. Along with Britain the Czech Republic also refused to put its signature. This pact imposes semi –automated sanctions for overspending governments and brings these regulations to the level of national laws. Greek Prime Minister Lucas Papademos claimed that an agreement with private creditors would be reached before the end of the week. Exactly the same pledge had been heard many times before without its further accomplishment then. However, the markets are still able to react to the statements of European politicians. On Monday morning the single currency showed more…

Will Fed’s greater transparency support the markets?

EUR/USD

In its global economic forecasts the International Monetary Fund tries to intimidate the world and the European leaders in particular. The IMF expects the GDP growth to make 3.3% in 2012, but if the Old World wallows in new grave problems, the GDP is forecasted to be only 1.3%. In fact, such slackening is likely to be caused by the crisis spreading far beyond the euro area and hampering the growth of the emerging countries. Specifically to the eurozone IMF’s chief economist Blanchard promised a 0.5% decline at year-end. Of course, that warning should be viewed in the context of the more…

European Debt-loaded Countries Calling for Mercy

EUR/USD

The European finance ministers refused the offer of Greek private debt holders. The country wouldn’t agree to the coupon payment of more than 3.5% while the Institute of International Finance set the minimum coupon level at 4%. The EU and the IMF take up the part of Greece, so the latter looks stronger. The essence of the problem is that the suffering European economies are likely to be in a dejected condition for many years to come. Greece’s GDP has been declining for five years in a row and will keep falling further, as debt payment makes the country to tighten more…

Euro Burst through the Channel, but Yet Has to Struggle to Keep its Positions

EUR/USD

The euro kept rising on Thursday. Since the start of the week it has already gone up to 1.2950 from the desperate 1.2620. In general, the positive sentiment was supported by well-bid auctions held in the countries enjoying a special interest of investors. Germany, Spain, France and EFSF as well were checking the market appetite for their securities. Demand proved high and yields – lower than during the similar auctions at the end of the year. But it would be really interesting to know what role the ECB played in these cases.  Interestingly, the EUR/USD was moving up almost invariably, which more…

EURO: Reversal or Sales Opportunity?

EUR/USD

Markets cannot remain in sell mode all the time. At one time or another the ticker will swing the other way. Perhaps, we will see one of these moments in the near future. The euro has found the support just above 1.26. This happened despite the S&P’s logical decision to downgrade the rating of the European rescue fund (EFSF) after lowering France’s rating. The good news here is that the lending capacity of the fund hasn’t been affected.  It still can lend up to 440 billion euro to the troubled European nations. That piece of news provided a short-term support to more…