Draghi’s Attempt to Talk Down Euro Lost on Traders: - News and Current Events | futures io social day trading
futures io futures trading


Draghi’s Attempt to Talk Down Euro Lost on Traders:
Updated: Views / Replies:178 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Draghi’s Attempt to Talk Down Euro Lost on Traders:

  #1 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

Draghi’s Attempt to Talk Down Euro Lost on Traders:

As far as currency traders are concerned, it’s going to take more than words for European Central Bank President Mario Draghi to weaken the euro.

The 18-nation currency has slipped 0.5 percent against a basket of nine developed-market currencies since Draghi said March 13 that the exchange rate is “increasingly relevant in our assessment of price stability.” That compares with a drop of 1.9 percent for the yen and a gain of 0.1 percent for the dollar, according to Bloomberg Correlation-Weighted Indexes.

The ECB, which meets tomorrow, is under pressure to stem a 20-month advance in the euro that has contributed to a slowdown in inflation that’s barely a quarter of its 2 percent target and has weighed on growth. Among the actions Draghi may take are cutting the central bank’s record-low interest rate or stop mopping-up the excess liquidity from its asset-purchase program.

“The time for talk is over and measures must be implemented,” Neil Jones, the London-based head of financial institutional sales at Mizuho Bank Ltd., said in a telephone interview yesterday. “Talk is not going to do it. Verbal intervention is insufficient.”
Exceeding Forecasts

Euro bears may need to be patient. Policy makers will keep their benchmark rate at a record 0.25 percent, according to all but three of 57 economists in a Bloomberg News survey. One sees a cut tomorrow to 0.1 percent while two call for 0.15 percent.

The euro strengthened 8.1 percent over the past year, snapping four straight annual declines from 2009 through 2012, according to Bloomberg Correlation-Weighted Indexes.

As it did for all of 2013, the euro performed better in the first quarter than analysts in Bloomberg surveys predicted, strengthening 0.2 percent to $1.3769, compared with a median prediction of a 3.2 percent drop to $1.32. In December 2012, they forecast it would finish 2013 weaker at $1.27, which turned out to be 8.2 percent lower than the $1.3743 close on Dec. 31.

Jones sees the currency climbing to $1.40 this year, from $1.3793 yesterday in New York. The median forecast of 88 contributors in a Bloomberg survey is for the euro to finish this year at $1.30.

The euro has been driven by signs that the region’s economic recovery is gathering strength, reinforcing demand for assets denominated in the currency that started when Draghi pledged in July 2012 to prevent it from splintering.
ECB’s Dilemma

While the currency’s strength is a tribute to Draghi’s success in driving out speculation on its demise at the height of Europe’s sovereign-debt crisis, it risks curbing an economic recovery amid almost record joblessness.

Purchasing-manager indexes released last week showed factory and services activity in the first quarter was the strongest in almost three years, and confidence in the region was the highest since 2011. In the euro-area, the jobless rate was at 11.9 percent in February, while in Italy it climbed to 13 percent, underscoring the dilemma facing ECB officials.

“The PMIs show the euro-zone is not contracting -- it’s a stagnation, but some are calling it positive growth,” Marc Chandler, the global head of currency strategy in New York at Brown Brothers Harriman & Co., said in a telephone interview on March 31. “That all will buy the ECB time because the next step the ECB may have to take is more drastic, such as a deposit-rate cut to negative yields. That’s a nuclear option because the ramifications are hard to know.”
Unwarranted Pressure

Draghi’s March 13 comments were the latest example of ECB officials becoming more vocal about the currency’s strength. He said March 6 that the exchange rate had cut 0.4 percentage point off inflation. Governing Council member Christian Noyer was more forthright four days later, saying a stronger euro creates unwarranted pressure in the economy.

Traders are betting that the euro’s resilience will endure, as shown by measures in the derivatives market ranging from future volatility implied by option prices to the cost of insuring against a drop in the single currency.

The 25-delta one-year risk reversal rate was at a 1.02 percentage-point premium for euro puts, which grant the right to sell the currency, over calls, the least since February 2013 based on closing prices. That’s down from the 2014 high of a 1.39 percentage point premium on Jan. 2.

Implied volatility on three-month options for the euro-dollar pair is at 6.5 percent, down from a peak last year of 9.5 percent in February, signaling traders see less chance of big swings in the euro.
Bears Setback

Hedge funds’ and other large speculators’ bets on the euro are now at 39,634 contracts in favor of appreciation of the euro, according to data from the Washington-based Commodity Futures Trading Commission as of March 25. That compares with a net-short position as recently as mid-February.

Another setback for euro bears came this week, when U.S. Federal Reserve Chair Janet Yellen said on March 31 that “considerable slack” in U.S. labor markets showed that the central bank’s accommodative policies will be needed for “some time.”

Yields on U.S. fixed-income assets became more attractive to investors after traders began to price in a rate increase by the Fed in the middle of next year. Two-year Treasuries yielded about 0.3 percentage point more than German bunds last month, up from 0.07 percentage point in December.

“We are not going to see higher rates in the U.S., for as much as people talk about,” Axel Merk, president and founder of Merk Investments LLC in Palo Alto, California, said in a March 31 telephone interview, predicting that the euro will climb to $1.50. “So the U.S. isn’t quite as great a place to invest in and Europe isn’t quite as bad a place to invest in.”
Deflation Threat

A report this week showed euro-area consumer prices rose an annual 0.5 percent in March, compared with the ECB’s target of just below 2 percent, raising the specter of a Japan-style era of deflation that discourages investment and spending. Prospects of ECB action faded after Governing Council member Jens Weidmann, who’s also head of Germany’s Bundesbank, said March 29 that officials should only react to “second-round effects” of slowing inflation, which aren’t evident currently.

“There isn’t enough confidence that the ECB will respond to the disinflation we’ve seen so far,” Henrik Gullberg, a London-based currency strategist at Deutsche Bank AG, said in a telephone interview on March 31. Traders “need the ECB to respond to disinflation” before selling the currency and using the proceeds to invest in higher-yielding assets, he said.

Draghi?s Attempt to Talk Down Euro Lost on Traders: Currencies - Bloomberg

Reply With Quote

Reply



futures io > > > > Draghi’s Attempt to Talk Down Euro Lost on Traders:

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
NQ traders let's talk! JustJoe Emini Index Futures Trading 15 May 16th, 2014 02:34 PM
Draghi Could Do This to Weaken the Euro Quick Summary News and Current Events 0 February 19th, 2013 02:00 AM
Mario Draghi Slaps Down Talk of 'Currency War' Quick Summary News and Current Events 0 February 18th, 2013 03:30 PM
Did Mario Draghi Just Kill the Rally in the Euro? Quick Summary News and Current Events 0 December 7th, 2012 02:30 AM
Draghi to Present New Vision for Euro Zone Within Days Quick Summary News and Current Events 0 June 15th, 2012 07:10 AM


All times are GMT -4. The time now is 01:55 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-13 in 0.10 seconds with 19 queries on phoenix via your IP 54.92.201.232