German ESM Ruling: Reaction

Now that German courts have given the greenlight the ESM, we shall take a look at how the market has reacted.

 

EUR/USD M15

DAX30 M15

XAU/USD M15

BCO/USD M15

Key takeaways:

Prices have rallied predictably on the back of ESM ratification. However a few questions remain

– Will Italy and Spain apply for bailout funds under ESM?
– Will the amount in ESM be enough to save Euro-zone?
– Will there be another need for parliamentary approval since German Courts has ruled that German liability to the ESM must not exceed €190bn without asking the Bundestag for approval.
– Will German courts consider the Outright Monetary Transaction (OMT) a violation of German sovereignty?

Using the last big EU/ECB news as reference (OMT announcement), we could potentially be see inactivity while the European traders digest the news and weigh all the unanswered questions. Perhaps we may only see a strong rally/sell off during US market opening.

 

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.