Waiting for Godot … or trading the Euro
Or is it waiting for Mario? The minutes coming from the meeting of the Fed yesterday did not give the markets the stimulus they were hoping for. There was a general acknowledgement that things are slow in the USA and everything is under close scrutiny. This could be loosely translated as jam tomorrow. No stimulus today, but maybe tomorrow. All eyes turn to the ECB now. After Mario Draghi’s comments last week, the market expects to see just what was meant by “everything in our power to save the Euro and it will be enough”. A drop in interest rates won’t qualify, as...
Read MoreECB impact on GBPUSD
ECB Impact on GBPUSD On 20 June, I wrote about central bank power and the impact the ECB can have on the currency value. This was in evidence again this week on Thursday, when Mario Draghi, the head of the ECB, stated they would do “whatever it takes” to save the Euro. I have chosen to illustrate the impact of his speech on GBPUSD, rather than the Euro. The 4 hour candle on EURUSD was 199 pips in range. The candle length for Cable was 232 pips. In either case, very significant movements. One of the “excuses” for weak GDP figures in the UK has been the turmoil in...
Read MoreUK GDP and the Olympics
UK GDP figures show a third consecutive quarter with the economy shrinking, or as the official term goes, negative growth. The quarter on quarter drop of 0.7% was far greater than the 0.2% anticipated by the markets. Naturally, the value of sterling fell after the announcement. I don’t know about you, but I have some sympathy for those claiming the weather slowed the economy down. With the wettest April and June for more than a century, it was hardly surprising that construction output fell. I can just imagine all of the muddy waterlogged building sites at a virtual standstill. I have...
Read MoreAfter the Euro summit
After the Euro Summit How quickly news drops out of the headlines. It was only a week ago that Eurozone leaders met for another in the series of Euro summits to save the Euro. Expectations were low, lower than a snakes belly in fact. Then something miraculous happened, an announcement of progress towards banking union. The markets immediately pushed the value of the Euro higher. Banking union is one of the pillars required to support a currency. One currency, one central bank standing behind it, with the central bank in turn monitoring and regulating the activities of the individual banks in...
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