Trichet Says Wave of Confidence Responsible for EUR Investments

A “wave of confidence” is behind recent investments in the euro zone and the strength of the single currency, according to the former President of the European Central Bank, Jean-Claude Trichet.

The rebound in peripheral euro zone bonds, despite a so far weak economic recovery described, has been attributed to various factors, including the lack of return on other investments. However, Trichet, who ran the central bank between 2003 and 2011, argued the answer was confidence.

“Global investors were extremely negative on the integrity of the euro, and now that its resilience has been proved there is a wave of confidence which might explain this strange behaviour,” he claimed in an interview with CNBC.

Mario Draghi, Trichet’s successor at the ECB, last week introduced a range of unconventional monetary policy measures — including negative interest rates on bank deposits and a new system of ultra-cheap loans to back small business — to try and tackle the lack of dynamism in the real economy. While there are no longer concerns about the survival of the euro, which sent bond yields in countries like Greece soaring to record highs during the debt crisis, employment and economic growth have stagnated in the region.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza