The conclusion of the Eurozone summit yesterday brought no new progress on the Greek debt crisis, leading to a growing sense of realisation that European policy makers are running out of ideas. This in itself is unlikely to be a shock to the market, as investors and speculators have been pricing in scenarios of Greece default and Eurozone dispersion for some time now – even though politicians have been adamant this was not an option. Obviously, the official rhetoric from Europe’s leaders has not formally changed just yet, but with another summit been and gone, perhaps we will start to see a change in that rigid denial of the possibility of Greece exiting the Eurozone bloc.
In spite of the unsatisfactory conclusion to the summit, risk appetite in general is looking more buoyant today after an article in the Financial Times suggested the ECB’s next long-term refinancing operation (LTRO) due on 29 Feb might see demand of up to EUR 1trn, almost double the amount of the previous LTRO. On the last occasion the ECB offered long-term loans to European financial institutions, the uptake far exceeded market estimates and the effect in the FX markets was for EURUSD to rally. As such, the story in the FT has garnered some positive momentum for the euro today. In addition, after yesterday’s difficult session for global equity markets, there has been a much better performance already from Asian indices, with the Nikkei up +0.1%, Hang Seng 1.4%, and Shanghai Composite +0.3%.
Coming up in today’s session, we will get the January unemployment data from Germany, UK mortgage approvals for December, and then the latest Eurozone unemployment rate which is expected to rise to 10.4% from its prior 10.3%. In the afternoon, the focus will be on US consumer confidence, and Chicago PMI.
In spite of the unsatisfactory conclusion to the summit, risk appetite in general is looking more buoyant today after an article in the Financial Times suggested the ECB’s next long-term refinancing operation (LTRO) due on 29 Feb might see demand of up to EUR 1trn, almost double the amount of the previous LTRO. On the last occasion the ECB offered long-term loans to European financial institutions, the uptake far exceeded market estimates and the effect in the FX markets was for EURUSD to rally. As such, the story in the FT has garnered some positive momentum for the euro today. In addition, after yesterday’s difficult session for global equity markets, there has been a much better performance already from Asian indices, with the Nikkei up +0.1%, Hang Seng 1.4%, and Shanghai Composite +0.3%.
Coming up in today’s session, we will get the January unemployment data from Germany, UK mortgage approvals for December, and then the latest Eurozone unemployment rate which is expected to rise to 10.4% from its prior 10.3%. In the afternoon, the focus will be on US consumer confidence, and Chicago PMI.
By
M.Zohaib Gadit
Forex Trading Consultant
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