Euro 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 MoreBritish summer and Draghi
A week ago, Mario Draghi, the head of the ECB was in London giving a speech. During that speech, he heaped support on the Euro project and actions in the pipeline to support it. It was not a case of doing something, but whatever was done would result in the end of the Euro crisis and there was no need to short the Euro any more. Wow. A week later, the ECB held its monthly meeting and was widely expected to do something. No-one knew what exactly, but it had to do something. The speech of last week caused a huge rally in the value of the Euro and a significant easing in the interest rates paid...
Read MoreWaiting 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 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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