Kicking the can
When it comes to kicking the can down the road, European ministers have shown the world their expertise. Aligned with their ability to fudge issues, it gives markets and commentators plenty of material to write about. This weeks further instalment of the Greek bailout is a case in point. After months of negotiation and discussion, including an open spat with the IMF, European institutions handed over several billion more Euros to Greece as part of their international bailout. IMF participation at this time was deferred. Greece now has the liquidity to meet it’s immediate financial...
Read MoreSovereign debt
So Moody’s took the decision to downgrade the sovereign debt ratings for France last week. This is the second ratings agency to strip France of it’s AAA rating, following the decision by Standard & Poors in January. That just leaves Fitch of the major ratings agencies having France with a AAA rating. One of the reasons cited was the level of debt as a percentage of GDP (Gross Domestic Product), which for France, is estimated at 90%. France has made several budget moves in an effort to get current year borrowing down to 3% of GDP for 2013, in line with the requirements of the...
Read MoreIs inflation next?
Yesterday evening, Ben Bernanke announced the action the Fed will be taking to provide a boost to the US economy. QE3, or printing dollars at the rate of $40 billion a month will continue until the US economy has better growth and employment. These are commendable goals but we have to ask: is inflation next? However, with more dollars being produced month on month, it means the value of each dollar decreases. As the value of the dollar decreases, the value of other currencies relative to the dollar increase, hence the rise in the value of the Euro over the past week, in spite of the Euro...
Read MoreQE3 arrives
This has been quite a momentous week on the currency markets. On Wednesday, the German constitutional court okay-ed the German governments contribution to the European Stability Mechanism (ESM), removing one potential obstacle in the Forex markets. It means the Eurozone countries have a backstop, for now. The Euro is trading close to 1.3100 against the US Dollar as I write this piece. A couple of months ago, the Euro was trading at 1.2250 and heading south. I would not have predicted a rise of this nature. So what has caused it? It is certainly not the strong Eurozone economy, that’s...
Read MoreEuro and the ESM – a long way to go
Yesterday’s announcement of unlimited support for the Euro from the ECB was widely expected. Indeed, the leaks have been coming as often as the rain showers. The pre-conditions for the buying of government bonds was also widely trailed. So yesterday’s announcement by Mario Draghi was just the confirmation of what we already knew. The ECB would buy unlimited short dated bonds from governments in financial trouble, as long as those governments confessed and accepted the road of supervision from institutions such as the IMF. This announcement was aimed at preventing Spain and Italy...
Read MoreAugust trading review
It’s been a quiet month, with trading volumes very low. Volumes of UK equities traded daily are about half the levels from earlier in the year. Yet the FTSE index has managed to reach it’s highest levels since early April. The current trend is showing upwards, with the moving averages all in the right direction and the 50EMA providing support yesterday. After a fantastic Olympics and now the amazing paralympics, eyes are not focused on trading just yet. When you look at the narrow trading range of EURUSD this week, and for much of August, you could be forgiven for thinking the...
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