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Is this an ECB Set Up?

It seems that the FX market wants to end this week overlooking the negative Bundesbank opposition comments to the SMP and ESM banking license. Investors prefer to hold on to the hopes of new aggressive easing measures by the ECB. This market resilience is highlighting the high level of expectations for next week’s policy meetings. Are we being set up for a major disappointment if neither the ECB nor the FED pulls the trigger? Draghi’s well documented and orchestrated move to talk down this market is the strongest signal to date that officials are now fully-focused on preventing capital market pressure on Spain from forcing the euro zone into a full formal bailout. A sovereign Spanish bailout runs the danger of exhausting the euro zone’s rescue capacity. It’s no wonder there is a need of a discussion granting the ESM a banking license. A license would give the ESM virtually unlimited intervention capacity because of its ability to finance itself at the liquidity operations.

Below are some other highlights of the week:


EUROPE

 

AMERICAS Week in FX [1]

ASIA Week in FX [2]

 

WEEK AHEAD

  • Monetary Policy meetings from GBP, USD and EUR dominate
  • Confidence data is delivered from USD and NZD
  • Manufacturing and non along with PMI’s are released in CNY, EUR, GBP and USD
  • Sales, growth and trade are presented from CAD, AUD and CHF
  • AUD and GBP release building stats
  • USD finishes the week with employment

 

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.

Dean Popplewell

Dean Popplewell [7]

Vice-President of Market Analysis at MarketPulse [8]
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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