(Español) Draghi insinúa la compra de deuda y precipita el desplome del euro


Any effort by the European Central Bank to launch a massive quantitative easing programme this year would fail to revive the eurozone economy, according to economists polled in a Financial Times survey.

The FT survey of 32 eurozone economists, mainly working in the financial sector, conducted in mid-December, found most expected the ECB to launch QE in 2015 — catching up with the world’s other main central banks that have all bought large quantities of sovereign debt since the last financial crisis.

Twenty-six economists forecast the central bank would start purchasing government bonds this year, while five thought it would not. One did not respond to the question.

A stuttering recovery and a worrying drop in inflation have raised fears of another financial crisis in the currency bloc and put pressure on policy makers to cast aside powerful opposition from Germany and begin purchasing sovereign debt.

ECB president Mario Draghi last week gave his strongest signal yet that the central bank would extend its asset purchases to include sovereign debt in the next few months. A decision could come as early as the next governing council meeting on January 22.

financial times online

Click here to read the full article on the Financial Times

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Thanksgiving dollar rally ahead of EU inflation

FX markets have shown greater volatility, with volumes higher across G10 space than we’d normally expect to see over the US Thanksgiving holiday. The Us dollar has reversed most of its 100-point demise following the weaker US data readings this week and as we await the EU CPI reading for November.

The much-awaited decision from OPEC ignited downside pressure on the CAD and the NOK as the committee (as expected) decided not to cut oil production, which obviously has implications for countries on the brink of deflation. But it appeases those countries looking to stimulate their economies as importers of black gold.

Data out of Japan overnight was mixed. The CPI data came in slightly weaker at 2.9% versus the consensus of 3% as retail sales firmly beat expectations at 0.2% against the forecast of -0.6% with retail sales bang on at 1.4% with the Japanese jobless rate falling to 3.5%. This inspired the Nikkei to rally 1.23% as USD/JPY trades back on the 118 handle despite the month-end selling flow sighted from exporters.

city index

Read the full article on CityIndex by clicking here.

Author: Neil Looker, cief forex dealer at CityIndez.

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Euro Falls on Draghi Stimulus Speech; Aussie Gains on China Cuts

The euro dropped the most in 12 weeks against the yen as European Central Bank President Mario Draghi said policy makers would broaden asset purchases if the inflation outlook for the region slowed.

Among the shared currency’s 16 major peers, only Switzerland’s franc fell, dropping amid speculation the nation’s central bank is intervening to defend a 1.20-per-euro cap. The yen strengthened, paring a fifth straight weekly drop, after Japan’s Finance Minister Taro Aso said the currency had depreciated too rapidly. Australia and New Zealand’s dollars climbed after China cut interest rates for the first time since 2012.

“The ECB is going to be delivering something more substantial at its meeting in December and his comments have been very much in line in confirming our view,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “People haven’t got as much of this trade on as they really want, which is why we’ve been seeing such a big reaction in the price to his comments.”

The euro weakened 1.3 percent to 146.32 yen at 10:17 a.m. New York time, reaching the steepest decline since Aug. 27. The shared currency dropped 0.9 percent to $1.2427. The yen advanced 0.4 percent to 117.75 per dollar, halting a six-day drop.


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Supports & Resistances


Currently trying to chew through offers into 0.7910. What a difference a day makes eh?

Sellers 0.7900-10 (stops above) 0.7925-30 0.7950 0.7965 0.7985 0.8000

Buyers 0.7885 0.7870 0.7850 0.7820-25 0.7810 0.7800-0.7795 (stops below) 0.7780-85 0.7750


Currently 1.5778 off Asian lows of 1.5759 protected by demand into 1.5700-50 target and capped by EURGBP demand

Sellers  1.5785-90 1.5800 1.5830 1.5850 (stops above) 1.5880 1.5900-10 1.5925 1.5950

Buyers   1.5760 1.5750 1.5725-35 1.5700-10 (stops below) 1.5685 1.5665 1.5650


Currently enjoying some love at 1.2460 but tempered by euro pairs finding some sell interest after good demand so far

Sellers  1.2475-85 1.2500-10 (stops above) 1.2525-30 1.2550-55 1.2580-85 1.2600

Buyers 1.2440 1.2425-35 1.2400 1.2385 1.2355-60 1.2350 (barrier option- stops below) 1.2325-35 1.2300


Currently 115.60 in retreat from the highs above 115.80 with 116.00-10 still providing good resistance, but there’s bids in the dips

Sellers  115.85-95 116.00-10 (stops above) 116.20 116.30 116.45-50

Buyers 115.40-50 115.20 115.00 114.85 114.65 114.50 114.25-30 114.00

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EUR/USD En-Route To 1.20


Mario Draghi defied the discontent and delivered a dovish message. EUR/USD is trading at the 1.2360 handle. What’s next for the single currency?

The team at Danske lays the potential path:

Here is their view, courtesy of eFXnews:

The ECB press conference today was clearly dovish in both Mario Draghi’s tone and the actual change in statement. The ECB now officially targets a balance sheet the same size as in early 2012 (Draghi said March 2012 during the Q&A), which is effectively a target of EUR3trn. This is an increase of EUR950bn from today’s level.

So, Draghi did it again. He speaks out of the manuscript initially – this time mentioning the size of the balance sheet in 2012 as a soft target without backing from the Council – only to get it into the manuscript subsequently.

The ECB was clearly dovish at today’s press conference. EUR/USD fell 1 figure on the press conference and we believe it has further to fall. In our view, it also reflects that the market is very keen to buy the USD and sell the EUR and is using any opportunity to express this view. We forecast EUR/USD will reach 1.20 in six months time.


Source: http://ow.ly/3tUusd

Author: Yohay Elam for Forex Crunch

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