Browsing all articles tagged with European

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.


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.


Cyprus Consider Early EU structural Funds, Officials Said

EU officials said that Cyprus is considering placed EU structural funds to earlier use to assist its stricken economy however is not asking for a superior bailout from the euro zone and the International Monetary Fund than the agreed 10 billion euro’s.

Nicos Anastasiades, Cypriot President told reporters in Nicosia on Friday that he would send a letter to European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso to give it extra assistance given the bad economic situation of the island.

That fueled assumption on financial markets that the island may be pushing Brussels for additional money under a bailout package which now illustrates Cyprus contributing roughly twice as much in budget cuts and asset sales than originally debatable.

However euro zone finance ministers gave political backing to 10 billion euro’s of loans for the Mediterranean island on Friday and stated there were no plans or requests to raise that amount.

The letter from President Anastasiades has nothing to do with asking for additional money than the sum decided in the MoU.

It is about a request for more financial assistance and support from our EU partners in the middle term as of the financial and economic situation Cyprus is facing.

The two international lenders have predicted Cyprus will contract about 9 percent this year and approximately 4 percent in 2014 prior to returning to growth in 2015.

Structural funds come from the long term EU budget and are used to co-finance projects in less EU developed countries to assist them enlarged economically.

The flow of such funds is increased over the seven years of the EU budget, however can be accelerated to boost the amount of money in the earlier years at the cost of the outer ones, this method has been employed to help Greece already.


EU Requir’s Who Vanished Italy Debate on Austerity

European official’s should be asking themselves who lost Italy following a common revolution’s against severity, political privilege and the unemployment reasoned an electoral earthquake in the euro zone’s third economy.

Instead most are persist that their policy mix to fight the euro zone’s debt crisis is right, although the current EU prediction’s have pushed any outlook of significant economic recovery in southern Europe back.

Beppe Grillo and the surprise resurrection of former Prime Minister Silvio Berlusconi on an anti-austerity platform in previous week’s election have thrust Rome into political deadlock a flow in support for anti-euro populist.

Mario Monti governed Italy with respected technocrat for 15 months since Berlusconi’s previous government knock down, is far from the worst exaggerated by the three year old debt crisis.

There unemployment rate is at 11.7 percent, less than half the rate of Spain and Greece, where one of every two young people are jobless.

If a milder slump and tax climb and less harsh spending cuts can sourced such a electoral and social revolt in Italy, the risks of an detonation in Spain and Greece ought to be superior.

European Commission President Jose Manuel Barroso said in a combined statement with Monti stated that the crisis is not yet over and efforts must not be relaxed.

Barroso stumble off statistics presenting current account deficits in Spain, Portugal, Greece and Italy were recoiling and Ireland was back in surplus. Exports from Portugal and Spain were growing and the labor competitiveness gap among southern and northern Europe was contracting.

Those statistics have a backside. Payments inequity are down mostly as those countries imports have contracted due to sinking demand. The labor cost gap has turn down mostly due to mass layoffs in southern states rather than productivity addition’s.


Gold Seized About 2 week Elevated As Ben Bernanke Backs Incentive

Precious Gold traded flat on Wednesday, settle on near a 2 week high strike in the last session as Federal Reserve Chairman Ben Bernanke protected the bank’s monetary policy, lending support to yellow metal as a hedge verses central banks’ cash printing.

Federal Reserve Chairman Ben Bernanke strongly defended the US central bank’s monetary incentive prior to Congress on Tuesday, easing financial market doubts over a possible early recoil from bond purchases.

US home prices closed out 2012 with the largest annual addition in more than six years as sales of new homes spiked in January, the hottest sign that the housing market was on the patch up, statistics demonstrate on Tuesday.

Italy’s political parties hunted for a way self-assured on Tuesday subsequent to an uncertain election gave none of them a parliamentary majority and threatened prolonged instability and a renewal of the European financial crisis.

Goldman Sachs cut its 2013 gold price predicted to $1,600  per ounce from $1,810 per ounce, stating the precious metal’s current price slump and an boost in US real interest rates have led it to bring forward its projections for a turn down in the yellow metal.

Spot gold was little changed at $1,613.61 per ounce by 0028 GMT, following trouncing a 2 week high of $1,619.66 per ounce. It increased 1.2 percent on Tuesday, its major daily addition in three months.

US gold slumped down 0.1 percent to $1,613.30 per ounce.

In addition, remarks from Federal Reserve chairman Ben Bernanke relieved investors that the central bank was not about to recoil on its asset buying program. Fed bond buying has formerly supported bullion.


Spain Stated ECB Bond Buying Plan Ready To Be Used

Spain stated a European bond buying plan was completely prepared for use and that there was completely no political resistance from within the euro zone to a Spanish bailout request.

The circumstances in Spain, which is considering looking for an aid program to ease financing pressure, dominated talks among finance ministers at the World Bank semi annual meetings in Tokyo.

Spain’s debt is rated by Standard & Poor’s and Moody’s just one notch above junk territory. Both rating agencies have a negative viewpoint on the debt and analysts believe a new demote would have unsuccessful consequences for the country. De Guindos said they will not move depending on the rating agencies.

Spanish Economy Minister Luis de Guindos said that the instrument is real. As it is real, it is organized to be used at any instant, referring to the European Central Bank’s promise of limitless bond buying to help debt stricken states.

The country is the newest epicenter of the euro zone debt crisis which started nearly three years ago, and investors suppose it won’t be able to collapse a big budget gap, control elevated reform and reform its economy without outside aid.

A senior euro zone source contributing in high level conference in Tokyo said that the loss of time on a Spanish request was not assisting to keep financial markets calm.


USD/CHF D1 Technical August 29

USD/CHF fall sharply during yesterday’s European and New York Session, and this descending movement should continue toward the support level of 0.9505 and then 0.9420. To reduce the risk, we can use invalidation point at 0.9635 level as Stop Loss. Also it is necessary to monitor the CHF KOF Economic Barometer and U.S. Prelim GDP q/q, Pending Home Sales m/m, Crude Oil Inventories, Beige Book data that can change the rate of the pair.


GBP/USD D1 Technical July 24

GBP/USD undergo losses during early hours of European Session, The trend line touching 1.5263 then 1.5389 will give support at 1.5434 which is very strong support. Closure below the trend line will be violently bearish and the pair should test the 1.5263 support area. Fed Chairman Bernanke speech can affect the rate of pair.


Greece Disfigured The Party Again, European Markets Reconciling Into A Modest Spanish Sunshine


As European markets today’s morning were reconciling into a modest Spanish sunshine from a previous week bailout of that nation’s banks, the presence of uncompleted Aegean business become visible to rear its head.

IBEX 35 index of Spain’s benchmark shoot up 5%. But as the European sessions proceed, it has been a steady downward slide. In European trading session, Spain’s main index was climbed about 1.4%.

The addition is surely adequate, given the disorder that is persistent in Europe’s fourth largest economy. It is a considerably pullback from highs nevertheless. Plus bond yields on Spain’s sovereign debt are currently rolling.

There are some proposals that this draw back is linked with some of the unresolved, perhaps unwritten, aspects on the nature of how exactly Spain is to obtain the EU sponsored funds for its banks that it was promised.

And that is perhaps a large part of it. Sure, doubtful chips away at Spain.

There is also Portugal and Italy and other so called marginal European nations balanced in the debt laden background.

However Sunday, June 17, does not forget Election Day in Greece, and that occasion not unexpectedly is both potentially game changing in importance and unusually Sisyphean in elements. Greek voters have previously rolled the boulder up the hill in early May. And it rapidly came back downhill.