June 11, 2014
The Euro has recurred its downward trend. Apparently the beginning of the ECB struggle with low inflation and quite strong report on the US labor market at last have inspired bears for new endeavors. As a reminder: last week Draghi followed his promise to do everything in order to save the Euro and undertook an unseen thing for global CBs: downgraded interest rate to negative level of -0.1%.
It is worth mentioning that during the first rounds LTRO ECB gave banks 3 year credits at the sum around 1 trillion Euros. By the current moment banks have repaid around 1 half of the debt, what lead to regular outflow of liquidity from financial system. If economics of the Euro zone showed stable growth, then the process would be most likely left unseen, but there are no signs of serious recovery.
In other words the ECB basically has recovered the status quo by letting banks to take credits on returned money on prior LTRO. Besides the regulator stopped sterilization of liquidity form purchasing of bonds in 2010 and 2011. All those measures have already lead to the fall of one of the main rates Eonia (the rate on one day bank credits) up to minimum level in the whole period of Euro zone existing (0.053%).
Overall the reaction of the market still weakly correlates with decisions made. Partly it happens because the future effect from these actions of the ECB is not obvious.
The Euro is down. The trend is quite strong and it extends as far as 1.3500. Over there the asset might get some support. Otherwise the movement is likely to continue.
Downward trend in the short term from 102.75 is exacerbating. Thought in the long run it just might be a correction of the upward trend. Support at current levels will determine which one is the case.
The Pound has rebound back up. Former support now acts as resistance on the way of the bullish trend. Inability to overcome it will definitely push the rate back down.
00:30 AUD Westpac Consumer Sentiment
08:30 GBP Claimant Count Change
08:30 GBP Unemployment Rate
13:45 GBP MPC Member Broadbent Speaks
17:00 USD 10-Year Note Auction
18:00 USD Federal Budget Balance
21:00 NZD Interest Rate Decision
21:00 NZD RBNZ Monetary Policy Statement
21:00 NZD RBNZ Rate Statement
21:05 NZD RBNZ Gov Wheeler Speaks
23:01 GBP RICS House Price Balance