Browsing all articles tagged with ECB
Jul
5

EUR/USD D1 Technical July 05

EUR/USD get a pull back from 1.3000 level yesterday after the news of ECB and dropped up to 140 pips. Now the support is at 1.2850 level and resistance is around 1.2950 level. break through any level will confirm the new trend for the pair. At this movement Bollinger bands are showing sell signals. But as long pair hold 1.2850 level there can up some upward movement.

So, price action on support level should be watch. H4 and D1 candle chart are showing a group of Buyers in this zone. If EUR/USD manage to hold its support and H4 candle closure above 1.2950 level then it will provide bullish strength to pair and EUR/USD will then continue its uppish trend towards 1.3048 which is acting as pivot point.

On the contrary, If pair fails to hold its support level 1.2850 and H4 candle closure below this level then it will open gates towards southward and EUR/USD will then fall rapidly towards 1.2800 level.

High impact News can affect the movement of EUR/USD. News like Non-Farm Employment Change, Unemployment Rate.

 

Jun
1

Record Unemployment Low Inflation Highlight Europe’s Pain

Unemployment has reached a new high in the euro zone and inflation remains well beneath the European Central Bank’s target, pacing pressure on EU leaders and the ECB for action to stimulate the bloc’s sickly economy.

Joblessness in the 17 nation currency area climbed to 12.2 percent in April, EU statistics office Eurostat stated on Friday spoting a new record since the data series began in 1995.

With the euro zone in its greatest recession since its creation in 1999, consumer price inflation was far lower the ECB’s target of just below 2 percent, coming in at 1.4 percent in May slightly higher then April’s 1.2 percent rate.

That augment may quieten concerns regarding deflation, however the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are not capable to find work exemplifying southern Europe’s lost generation.

Policymakers and economists including Germany’s finance minister Wolfgang Schaeuble have stated the greatest menace to the unity of the euro zone is now social collapse from the crisis, rather than market-driven factors.

In France, Europe’s second biggest economy, the number of jobless rose to a record in April while in Italy the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers handling of Europe’s debt crisis.

Some economists suppose the ECB, which meets on June 6 will have to go beyond an additional interest rate cut and consider a US style money printing program to breathe life into the economy.

Nick Matthews, a senior economist at Nomura International in London said we do not expect a strong recovery in the euro zone. It puts pressure on the ECB to deliver even more conventional and non conventional measures.

May
11

ECB Says Has Tools Left to Act if Required

ECB policymakers said that European Central Bank still has room to plan should the euro zone economy persistent to worsen following it cut interest rates to a new record low previous week. The ECB cut its main rate to 0.5 percent previous Thursday.

Yves Mersch, a member of the ECB’s six-man Executive Board stated the bank still had tools at its disposal, however added that it could only spur lending to small euro zone companies in combination with other European institutions.

Joerg Asmussen stated the ECB had an open mind about what it could do to renew lending to small and medium-sized enterprises known as SMEs a growing concern for the central bank, principally in the crisis-stricken periphery countries.

Mersch said in a panel discussion in the northern German city of Aachen that we still have tools in our toolbox we are not a toothless tiger.

The ECB stated previous week it had set up a task force with the European Investment Bank known as EIB to assess ways to unblock lending to SMEs, for example by supporting a market for asset-backed securities known as ABS based on SME loans. ABS would permit banks to pass some credit risk on to other investors, enabling them up to lend more.

The move to promote ABS is controversial mainly in Germany, because during the financial crisis such securities became toxic due to the default of housing loans that underpinned them.

We have an open mind to seem at all things that we can do within our mandate and this relates to how can the market for asset backed securities, particularly backed by SME loans, be revitalized in Europe.

Asmussen was responding to a question regarding a Wednesday article in German newspaper Die Welt, which cited a central bank source as saying a majority of ECB Governing Council members seemed to be in support of the central bank buying ABSs itself.

May
4

ECB Cuts Interest Rates, Open to Further Action

The European Central Bank cut interest rates for the first time in 10 months on Thursday and held out the likelihood of further policy action to hold up the recession hit euro zone economy.

Responding to a fall in euro zone inflation well below its target level and growing unemployment, the ECB lowered its main rate by a quarter percentage point to a record low 0.50 percent.

Mario Draghi, ECB President promising to provide as much liquidity as euro zone banks require well into coming year and to help smaller companies get access to credit, also indicated that some policymakers had pushed for a bigger cut.

He told a news conference after the ECB’s Governing Council met in Bratislava, there was a very, very strong existing consensus towards an interest rate cut. Within that, there was a prevailing consensus for a cut of only 25 basis points.

The ECB was also technically prepared to cut its deposit rate from the current zero percent into negative territory, meaning it would begin charging banks for holding their money overnight.

Such a move could encourage the banks to lend out money rather than hold it at the ECB, although it would also almost certainly have a big impact on banks own operations and major implications for funding and bond markets.

Draghi said the ECB could cope with these, a departure from his prior statements.

There are several unintentional consequences that may stem from this measure, we will address and cope with these consequences if we make a decision to act. And we will again look at this with an open mind and we placed ready to act if needed.

Acknowledging that, the ECB stated it would prime banks with as much liquidity as they need until at least July 2014 and look at ways to enhance lending to smaller companies, which are the lifeblood of Europe’s economies however have been starved of credit in many countries.

Apr
25

IMF, ECB Square off in Europe Severity Debate

An intense debate about Europe’s austerity drive flared back into life on Thursday with leading IMF and European Central Bank officials harshly at odds and Angela Merkel declaring that Germany required superior interest rates.

With the threat of the currency bloc’s break-up retreating; some euro zone officials are saying currently is the time to throttle back on debt cutting drives as calmer financial markets will not react badly.

The International Monetary Fund is also pushing that prescription for both the Britain and euro zone however Germany and the ECB are opposed.

IMF First Deputy Managing Director David Lipton told a conference in London that there is a risk that Europe could drop into stagnation, which would have very serious implications for households, banks, companies and other bedrock institutions.

He further said that to decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth.

However at the same conference, the Economist’s Bellwether Europe Summit, ECB Executive Board associate Joerg Asmussen urged governments to push on with budget consolidation and reforms.

Asmussen said delaying fiscal consolidation is not a simple way out. If it were, we would have taken it; holdup fiscal consolidation is no free lunch. It means superior debt levels and this has real costs in the euro area where public debts are already very high.

The ECB is expected to cut interest rates coming week, even though a quarter-point reduction is unlikely to lift the euro zone economy out of recession.

Lipton said it will perhaps require additional unconventional measures from the ECB, as Asmussen said monetary policy was not an all purpose weapon.

The ECB is in a difficult position, for Germany it would really have to lift rates slightly at the moment, however for other countries it would have to do even more for more liquidity to be made available, she said at a banking conference, in a strangely outspoken comment on central bank policy.

Apr
24

ECB poised to cut rates to help recession-hit euro zone

The European Central Bank is closer to inferior interest rates than at any time since it previous cut them in July 2012 and is likely to shave a quarter point off at its policy meeting coming week.

Senior sources involved in the negotiations say momentum is building for action to assist a euro zone economy which has fall back into recession, a move that some policymakers wanted to take earlier this year.

Inflation descending well below target gives the bank scope to act and a senior ECB official stated even Bundesbank chief Jens Weidmann, the most hawkish member of the 23 man Governing Council had an open mind.

Following the bank’s previous monetary policy meeting on April 4, ECB President Mario Draghi signaled that a cut could come soon when he stated that the bank stood ready to act to enhance the recession hit euro zone economy.

The ECB’s Governing Council meets in Bratislava coming Thursday one of two annual policy conferences outside Frankfurt. The 23 man body infrequently moves rates when it meets off base; however the bleak economic picture strengthens the case for action.

Any decision on whether to act in May will depend on the economic statistics. Benoit Coeure, a dovish member of the ECB’s core group of policymakers said on Monday the bank had not seen statistics pick up since its last rate decision.

The ECB expects a steady recovery in the euro zone in the second half of this year, subject to downside risks. Facts indicating the economy’s performance will be weaker than that scenario would strengthen the case for a rate cut.

Policymakers think a rate cut would have limited impact on the economy however would at slightest show they are supporting it. A decision to cut could well not be generally supported.

That marked the fourth time the German Composite PMI has dropped below 50, into contractionary territory since September 2008. On the preceding three occasions, an ECB rate cut has followed immediately following publication of the final data or the month after.

Apr
23

Euro zone Slump Moderates However German Uncertainties Appear

A sharp fall in German business activity overshadowed an easing slump in France in April, surveys showed on Tuesday, and lifting concerns over a further economic contraction in the euro zone.

Markit’s flash euro zone services PMI, an early gauge of business activity each month climbed to 46.6 in April from 46.4 in March, below the 50 line that divides growth from contraction however matching the predicted of economists.

Survey compiler Markit cautioned against taking the increased as a clear sign the region’s recession has bottomed out, pointing to a surprise turn down in German companies that form the backbone of the euro zone economy.

Chris Williamson, chief economist at Markit said that formerly we’ve seen Germany expand while other countries have contracted – notably Spain, France and Italy.

Currently it seems those contractions are being accompanied by a recession in the largest economy, Germany, and that will no uncertainty act as a drag on growth.

Williamson stated officials at the European Central Bank, which meets coming week to decide monetary policy, may be relieved to see the euro zone PMIs at least did not signal a promote deterioration this month.

The forward looking indicators suggest there are risks to the weakness for the contraction to gather pace. The euro zone economy contracted 0.6 percent quarter on quarter in the previous three months of 2012.

Comments by European Central Bank policymakers on Monday stressing declining inflation and poor growth prospects in the euro zone suggest the ECB may be leaning towards an additional cut in its main interest rate.

Confidence in services companies concerning the coming year slipped to the lowest level this year, with the business expectations index fall to 55.7 from 56.2 in March.

Consumer morale in the euro zone improved in April, the European Commission stated on Monday, however remained well below the currency area’s long-term average.

Apr
19

German Court to Hear Case Against ESM, ECB bond-buying in June

Germany’s Constitutional Court said on Friday that it would hold a public hearing on complaints against the euro zone’s bailout fund the European Stability Mechanism, and the European Central Bank’s bond buying program on June 11 and 12.

The seven complaints in total, reflect German unease regarding the mounting costs of dealing with the three year debt crisis and fears that the ECB bond buying program may violate the taboo against direct central bank financing of state budgets.

The court based in Karlsruhe southwestern Germany, ruled in a preliminary verdict previous September that the ESM did not violate German law and could go further on, while it insisted on veto rights for the German parliament.

The ECB has not yet trigger the program as struggling euro zone states, previously implementing tough austerity measures, are reluctant to recognize the onerous conditions of the program, however the pledge alone has been enough to bring down their borrowing costs over recent months.

Gunnar Beck, constitutional law expert said he did not expect Karlsruhe to support the complaints, given its precedent record on not blocking moves towards European integration, despite the legal worries over the bond buying program.

There is no doubt that the EU contract, rule out bond purchases whenever they might facilitate state financing through the printing press and permit indebted states to obtain enhanced rates than they would otherwise.

There is no significant precedent where the German constitutional court has directly challenged the German government over an issue of European policy.

He added, I have no doubt the court will present to the government’s wishes in one form or another when it comes to the ECB bond purchases.

Political analysts say a decision is unlikely earlier than Germany’s September election when Chancellor Angela Merkel, her popularity enhanced by what voters see as her competent handling of the euro zone crisis is expected to win a third four year term.

Apr
6

European Central Bank ‘s Coeure sees euro zone inflation straying off course

Executive Board member Benoit Coeure said that ECB will monitor euro zone inflation carefully over the next 18 months because it threatens to sink further below the ECB’s 2 percent target.

Euro zone inflation fall in March for a third straight month to an annual rate of 1.7 percent, compared to the ECB’s target of close to, however not above 2 percent.

Coeure told reporters that they have a rate of inflation which looks set to move away from the ECB’s 2 percent target over the coming 18 months, adding that a slump in inflation was as worrying as a climb.

Coeure further said that it is still fairly close to the 2 percent target however it is moving below that goal and this is something the board of governors is clearly following because they have a goal of 2 percent.

Current economic statistics is in line with the ECB’s projections for the bloc this year and coming with no bad surprises, saying this justified the bank’s resolution this week not to lower rates, despite doubts regarding weak domestic demand.

The ECB held rates at a record low 0.75 percent on Thursday the maximum level between the world’s major central banks, however ECB chief Mario Draghi stated the central bank stood prepared to act to boost the stalled economy.

Underlining the difficulties receiving credit flowing in the alliance, Coeure stated many banks were discouraged from granting new loans because their balance sheets remained weighed down with assets acquired before the financial crisis which had since lost value.

Though the ECB has provided huge amounts of liquidity to banks, Coeure stated the central bank did not have a position to play in mitigating the risks from banks’ pre-crisis legacy assets.

Monetary policy cannot be the main tool used to attempt and resolve difficulties with credit flows. Monetary policy can contribute however it cannot completely resolve these problems.

The ECB is concerned its low rates are not getting households and companies in the euro zone margin, mainly as banks’ funding costs in crisis-hit countries are higher than those in the core countries pushing up loan costs.

Mar
30

European Central Bank’s Knot backs Jeroen Dijsselbloem comments on bank rescues

Klaas Knot, ECB Governing Council member stated on Friday that there was a little wrong with Euro group chairman Jeroen Dijsselbloem’s method for dealing with future euro zone banking crises.

Dijsselbloem, the head of the euro zone’s finance ministers and similar to Knot a Dutchman stated on Monday that the rescue program decided for Cyprus the first to compel a levy on bank deposits would serve as a model for future crises.

Those comments in which Dijsselbloem afterwards rowed back on, encouraged a market sell off and led two other European Central Bank policymakers, including executive board member Benoit Coeure said on Tuesday that Cyprus was a exceptional case.

However Klaas Knot, who sits on the bank’s main decision making body stated that there is little wrong with Dijsselbloem’s comments.

The content of his comments comes down to an approach which has been on the table for a longer time in Europe. This approach will be component of the European liquidation policy.

Spokesman for the central banker stated Knot’s remarks, reported by Dutch daily Het Financieele Dagblad were precise.

They threaten to additional muddy the waters over an concerns that continues to divide senior politicians and monetary policymaker in the currency alliance who should foot the bill for cleaning up the region’s under performing banks.

In his speech on Thursday night in Amsterdam, Knot said euro zone banks required to clean up their balance sheets by winding down loss making procedures.

He further said initially, there has to be transparency regarding losses in the banking sector. Secondly, banks have to wind down their loss making operations.

Under the Cyprus bailout the bank depositors whose accounts hold more than 100,000 euros face heavy losses.