Posts Tagged "european central bank"

August trading review

Posted by on Aug 31, 2012 in Commentary, Featured, Market News, News

August 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 market has gone into cardiac arrest. I can conjure up a picture of this now, the market lying moribund on the ground, not a movement. And rushing over with the defibrillator, Ben Bernanke and Mario Draghi. One of them is holding the left paddle, the other the right. Neither is too sure what to do next, but both are looking down at the patient. The patient is wearing a sweater with the words “world economy”. Now what? Both of them are preparing their next moves. For the defibrillator to work effectively, they’ll need to both act in unison. Problem is, they are facing different battles in their own respective continents, with a USA election imminent, a Greek progress report in a few days coupled with a constitutional court decision in Germany. All will be interspersed with a US holiday early next week, followed by non-farm payroll figures next Friday. Will the defibrillator be used? Or will the patient remain lifeless? There’ll be an interesting couple of weeks ahead. Happy...

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British summer and Draghi

Posted by on Aug 3, 2012 in Commentary, Market News, News

British 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 by Spain and Italy. Come the hour, it was a case of light the blue touch paper and retire to the sidelines to watch the display. We waited a long time and still nothing except talk. The inevitable damp squib followed. If talk of action moves the market one way, lack of action can just as easily move it the other way. That is precisely what happened next. The Euro fell, interest rates rose, stock markets sold off. It was another example of why the Euro crisis persists. Everyone knows that something needs to be done. But no-one is actually doing it. Yesterday’s conference by the ECB had much in common with the British summer this year. It promised so much, we all had high hopes. The reality is pretty miserable and it never seems to change. At least we can congratulate our Olympians who put in a fantastic performance...

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Waiting for Godot … or trading the Euro

Posted by on Aug 2, 2012 in Commentary, Market News, News

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 that is just business as usual. There has to be something of a “shock and awe” content to today’s announcements and the implementation has to be NOW, not sometime in the future once a new treaty is ratified by all member states. If Mario delivers, we can expect a rally in the value of the Euro. Otherwise, it is likely to start heading south again. Until the non-farm payroll figures tomorrow that is. My weekend has started already, I’m an observer on the sidelines through this and will resume trading the Euro once the dust settles...

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ECB impact on GBPUSD

Posted by on Jul 27, 2012 in Commentary, Featured, Market News

ECB 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 Europe and the Eurozone. For any disbelievers, the market response to Mario Draghi’s speech provides compelling evidence of the impact of the Euro on the value of sterling and the UK economy. For anyone watching the market this Friday afternoon, the value of the Euro has continued to rise on the back of weak GDP figures from the USA, with EURUSD now trading more than 300 pips above the lows established earlier in the week. What do you predict for the ECB...

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