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…

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…

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…