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Hi everybody, and welcome back! Day after rates, NFP in the U.S. expected with a sharp fall again, and dollar is falling all across the board. The massive decline in jobs, will be the last push greenback needs to fall, or will just feed risk aversion and made it come back to yesterday’s levels? Europeans have rose around 100/150 pips, nothing spectacular and longer term changing yet, but the signs of probable bottom are getting reinforced with this movements, plus, Euro and Gbp hold yesterday while U.S. stock plummet to record lows. Asia also fell hardly, and Europe is fighting to stay positive.
I’ll be right back to start with the technical perspective for majors.
Here is the link for today’s calendar:
http://www.fxstreet.com/fundamental/economic-calendar/
Have a great day!
Hello, Valeria!
Some thoughts regarding the ECB rate decision.
Well, I have been wrong in my estimation of the ECB aims.
Apparently they are not worried about integrity of euro currency that much, at least for this moment. Inflation
will return to Euro-zone with vengeance! It will be ferocious. Considering very high taxes on petrochemical products it is safe to assume that consumer prices on basic staples will skyrocket. A lot of European workers are unionized and not so well off so the back feed will be fast — they will go on strike. I do not see how the perpetual strikes can help to get out of economical malaise but I can easily envision how inflation and government meddling can turn this economical malaise into
full-fledged depression, actually into the worst possible depression — inflationary stagnation aka stagflation.
Obviously they have some good reasons not to worry about the above mentioned scenario, but I could not grasp their reasoning.
Anyway, I do not think that this rate cut will help to support the declining stock market, shore up falling real estate or help the European
consumer. What is interesting though is the reaction on FOREX. Euro did not fall. It went up. Hm, interesting. Was that because the market has already discounted this decision or for some other reason? I have no clue. What do you think? Any ideas are interesting and worthy to consider.
Anatoli
Hi Anatoli! Sorry for not answering your previous post. I have been quite busy yesterday, so my apologizes! As always, your comments are acurated: have no doubts about inflation coming back not only in the Euro zone,but that’s a long term scenario, that nobody’s taking into consideration right now, preciselly because eyes are on the other side of the coin: resession.
I really enjoy this “conversation” and apreciate very much your ideas. Hope to hear again from you soon!
Stagflation slow economic growth,with high unemployment accompanied by inflation, is still not here, and seems authorities have more urgent things to solve, and as ALL WE HUMANS DO,consecuences are not being measured. I always think human race epitaph will be “they didn’t know what they were doing”. Yet,it’s too easy to criticize others without taking there places. At least I can recong I can’t rule not a country, not a Central Bank.
But back to forex! I guess market already discounted previous rate,and was waiting the speech for next month decission. What is really interesting and shocking is that Euro rose DESPITE Trichet comments left doors open both to more rate cuts and quantitative easing.Yet we are kind of mixing here.. the pair rose what 100/150 pips? that’s a lot in the short term, and nothing in the longer. We are micing a longer term worse than actual scenario, with a first short term spike of 1 cent. No doubts, not easy to separate them, but we should.And that’s why I intent at least, to do.For me, and just for me, longer term scenario have chances to change only with Euro above 1.30′. Under 1.2300, more falls. In between I can’t read much more. Short term scenarios is what I post here daily basis, so not much to add about them.
Just one final thing: english is not my native language, and as I read back my answer, have the feeling could sound a bit agressive. That’s not at all the intention, but my ignorance,
Regards
Val