Online-Trading SNAP 09.06.2014: Smoke curtain The expectations bar heading into the ECB meeting last week was sky high. Still Mario Draghi and Co. managed to leap above it in a bold move to fight stagflation risk. Despite this the euro actually gained against the dollar and suffered only moderately against other currencies. Before we move to the FX, which lays obviously at the center of our interests, let us shortly comment on the macro side of the ECB package. The Bank lowered all interest rates with the MRO going down to 15bps and the depo to an unprecedeced -10bps, announced a new form of the LTRO, halted SMP sterilization and promised the QE at some point. All those factors have an impact on the market rates. However, since market rates were already close to 0%, do not expect those minimal differences to impact the economy in a major way. They are important for the currency though, and a weaker euro will help. While the ECB repeats the exchange rate is not a target itself iut surely plays a major, if not the key, role in this policy setting. Among all those tools the QE – not yet introduced, might have the largest direct impact as it may lead to increase in lending to the private sector. Yet keep in mind the QE has not been intoduced for a reason. It is not that simple to create rules that would really transform ECB purchases into new lending, keep the product simple and meet regulatory objectives. With this in mind, the ECB must achieve a lot with the exchange rate and the packagte that has been introduced nearly makes sure that the euro will depreciate. Those minor differences in interest rates might not be crucial for the business but they are for money market tarders. For a half a year short term market rates in EUR were higher than in USD because overliquidity evaporated and rates drifted from the (0%) depo rate to the (0,25%) MRO. So despite a cut to the MRO in November’13 monetary policy in the eurozone actually became more restrictive, mainly because banks deleveraged (paying back the LTRO among other actions) to meet restrictive ECB stress tests. The June decision finally adresses this issue at the core. First, by lowering the MRO the ECB drags the cap for the very short term rates 10bps lower. Secondly, by incjecting liquidity (no SMP sterilizations + TLTRO) the Bank hopes to drive market rates away from the MRO and closer to the depo rate, now at a negative territory. Actually, the lower depo rate at this stage seems to be the least relevant of the changes but it has a psychological impact on the market and may drive non-banks to high quality debt, cutting yields or even taking bills to negative levels. This all should discourage cash balances from holding the EUR deposits and we think a weaker euro, not a fresh credit, is the channel the ECB relies the most right now (continued in the FX part). Weitere Themen im Online-Trading SNAP: * Currency market: ECB and the dot chart * EURUSD, D1 - GBPUSD, D1 - NZDUSD, D1 * Commodities: Brent oil prices – downside risk * US.500, D1 - OIL, W1 - NICKEL, W1 Den XTB Online-Trading SNAP können Sie hier runterladen: Online-Trading SNAP Veröffentlichungen von X-Trade Brokers, die bestimmte Situationen in den Finanzmärkten kommentieren sowie allgemeine mündliche Aussagen von Mitarbeitern von X-Trade Brokers hinsichtlich der Finanzmärkte stellen keine Beratung des Kunden durch X-Trade Brokers dar und können auch nicht als solche ausgelegt werden. Risikowarnung dlvr.it/5xN4gg
Posted on: Tue, 10 Jun 2014 08:52:35 +0000
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