Euro (€) Currency Thread

inspector_monkfish

someone or something is driving this gbp/eur to par

its all wrong i tellz ya !

1.0780 right now

dealsearcher

Maybe it's this quantitititititit ... printing money.

Can't understand why anyone would sell the pound against the euro voluntarily at this rate.

inspector_monkfish

I know this is long-winded, but it is worth a read.
It tells how the rest of the world have their eyes on the UK markets as the Bank of England's QE programme begins. It also mentions that the Fed Reserve are impressed, so far.



13:56 11Mar09-BoE gets no offers from non-banks for gilt programme


LONDON, March 11 - Britain on Wednesday officially launched quantitative easing -- effectively printing money -- to pull the economy out of recession, but its first offer to buy UK government bonds drew no response from non-bank institutions such as pension funds and life insurers.

The central bank will now offer to buy 2 billion pounds of gilts from banks in the next stage of its 75 billion pound asset-buying programme. Results of that are expected after 1445 GMT.

Strategists said they were not that surprised due to the complexity of the process, and gilt prices rose as it raised the stakes for the next so-called reverse auction.

"I don't think you can read a huge amount into it. The participants are still getting used to the new system," said Sean Maloney, fixed income strategist at Nomura.

John Wraith, head of sterling rate strategy at RBC Capital Markets agreed. "I think there wasn't much of a rush given it's going on for the next few months. I don't think it's the end of the world," he said.

Central banks around the world will be eager to see how successful the BoE's efforts are in bringing down market interest rates, boosting demand and encouraging banks to lend.

The Wall Street Journal reported that the Federal Reserve had been struck by the early apparent success of the BoE's quantitative easing plans -- 10-year gilt yields have fallen to record lows since it announced the purchases last week -- and the U.S. central bank could move towards a similar effort.

As gilt yields have plummeted, corporate bond spreads have widened, leading some analysts to question whether the BoE should be paying more attention to bringing down the cost of corporate borrowing.

Policymakers have been forced to consider unconventional policy action to stave off a global economic slump because official interest rates are nearing zero and there is some doubt over how effective further rate cuts would be.

The BoE has cut rates to a record low of 0.5 percent in response to a sharp downturn. Britain's economy shrank at its sharpest pace since 1980 in the three months to December.

The central bank hopes that by buying up bonds, making yields fall sharply, it will make it cheaper for companies to borrow on the capital markets. Institutions that have sold gilts to the BoE, meanwhile, will have extra money to lend.

dealsearcher

inspector_monkfish wrote: »

... but its first offer to buy UK government bonds drew no response from non-bank institutions such as pension funds and life insurers.

"I don't think you can read a huge amount into it. The participants are still getting used to the new system," said Sean Maloney, fixed income strategist at Nomura.

I think you can read a lot into it. You can say the institutions are saying: 'give us an even better deal and we'll think about it'.

We're going to be fleeced again.

inspector_monkfish

lets see if the markets can smash it down to 1.06 today ....

dealsearcher

inspector_monkfish wrote: »

lets see if the markets can smash it down to 1.06 today ....

Don't see the point myself. You buy when the price is low. You don't sell.

If it goes lower it can surely only be for technical reasons e.g. as a result of QE or funds having to sell sterling at this time for other reasons.

Surely the markets see that the UK has been open about it's problems and europe hasn't?

I refer back to the bold print in my Joel Kruger reference of 9 March.

inspector_monkfish

dealsearcher wrote: »

Surely the markets see that the UK has been open about it's problems and europe hasn't?

quote]

that in a nutshell is the problem !!

i don't think the markets do see this.
for what its worth, i also think the markets are wrong !!

jackieblack

inspector_monkfish wrote: »

i don't think the markets do see this.
for what its worth, i also think the markets are wrong !!

:T Well said Mr Fish! ..... now is anyone with any influence out there listening????? :wall:

We can but live in hope! :doh:

dealsearcher

inspector_monkfish wrote: »

... for what its worth, i also think the markets are wrong !!

The trouble is the markets rule. If the market has the euro strong and the pound weak then that's it whether they are right or not. :huh:

inspector_monkfish

dealsearcher wrote: »

The trouble is the markets rule. If the market has the euro strong and the pound weak then that's it whether they are right or not. :huh:

precisely!

make that 1.05 then.....