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Between problems in Europe and problems in the US the EUR/USD currency pair has it's fair share of up's and down's. Troubles with the European Union namely Italian and Spanish bond yields coupled with a Non Farm Payroll miss in the US means traders of the pair have some big decisions to make. Friday, after the jobs number came out the reaction was clear, Euro up, Dollar down which was strange to some as the US index futures were taking a hit at the same time the dollar was. This was a product of a reversal in the trend of US dollar inflows supporting the dollar recently. The US was the least ugliest duck in the pond so money flowed in to buy US assets. The recent rise in Spanish bond yields is the real culprit I suspect though. The US jobs number was just the straw that broke the camels back. That will make the pressure to raise Euro's stronger than the pressure to raise dollars in the coming week as a lot of the inflow into the US came from Europe.. Also the likelihood of more US QE should weaken the dollar across the board.  A look at the pair on a monthly chart shows the roller coaster ride traders have been on for the past 3 years. . Notice the last two months on the chart show…
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37/94
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When economy starts to move closer to recession and at the same time unemployment is at record levels, when the central bank lowered interest rates to the lowest level, when financial stability is shaken and the market is faced with a distinct lack of liquidity then the central bank often faces pressure to QE or some other measure in order to ensure better liquidity in the market. After the FOMC statement, we expected something more aggressive monetary easing, however, the Fed has just presented the Operation Twist, which will come to decomposition maturities and so it will sell securities maturing in three years and buying maturities from 6 years out to 30 years. The Fed also left the key rate 0-0.25%.Certainly the highest expectations of the market is to have regard to QE3, this time was not  the theme of statement, which is certainly a disappointment for buyers in commodity and stock market. On the Forex is the expectation the dollar strengthened against almost all currency pairs, so the       EURO / USD after two hours of the statement fell about 200 pips. If we look at the long-term eur/usd pair and dollar index, we will see that the situation to the global recession is alw…
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Livornese avatar
Livornese 24 Sep.

I like when somebody has an opinion and put it forward!

stomaraka avatar
stomaraka 30 Sep.

Agree with your reasoning - all cards are stacked to fall of euro, but it never is smooth one-way ride. There will be a lot of volatility, but the main trend for now is down.

Good article.

Sly_Fox avatar
Sly_Fox 12 Mar.

Good article

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