Euro (€) Currency Thread

inspector_monkfish

07:23 05Mar09 (EUR) January retail sales disappointing

(EUR) Retail sales in Germany declined 0.6% m/m (-1.3% y/y) in Jan coming in worse than expected. The previous month's reading was revised up to 0.5% m/m (0.4% y/y) from the original -0.2% m/m (-0.3% y/y) reading. The real index fell to 96.1 from 96.7 in Dec on a seasonally adjusted basis. Separately, a German newspaper reports that the govt may need to borrow more money (EUR 58bn) this year than planned citing Fricke - Chair of the Budget comm.

inspector_monkfish

antenna wrote: »

Euribor down today by 22 clicks or .022 at 1.478 from 1.500 1 month rate.
last five days show 10 clicks,13,12,18 and today 22, so gathering speed before thursdays ecb rate announcement.

here is a good comparison of LIBOrs....


GBP 3mth Libor is currently 2.017 - thats 101.7 basis points OVER the current base rate of 1pct

USD 3mth Libor is currently 1.277 - thats 127.7 basis points OVER the current base rate of 0pct (officially 0-0.25)

EUR 3mth Libor is currently 1.779 - thats 22.1 basis points UNDER the current base rate of 2pct

looks like the EUR0zone is still playing catch up gig time !

of course all this will change later today.....

inspector_monkfish

trading at 1.1275

inspector_monkfish

FACTBOX-What is quantitative easing?

Central banks throughout the world are considering or turning to non-conventional measures like quantitative easing to keep credit flowing as they run out of scope to lower benchmark interest rates any further.
But what is quantitative easing? Here are some details:

WHAT IS QUANTITATIVE EASING?
-- Quantitative easing, notably employed by Japan from 2001 until 2006, refers to ways of boosting economic growth after traditional monetary policy tools, such as interest rate targets, have been exhausted.

-- Central banks flood the banking system with masses of money, more than is needed to keep official interest rates at zero or a low rate, to shore up financial systems and promote lending. They usually do this by buying up large quantities of assets from banks.

MAJOR CENTRAL BANKS AND QUANTITATIVE EASING:

* U.S. FEDERAL RESERVE:
-- Economists agree the Fed's various programmes to boost the flow of credit through the expansion of its balance sheet to over $2 trillion can be regarded as a form of quantitative easing.

-- On March 3, the Fed announced the details of the Term Asset-backed Securities Loan Facility, TALF. A $200 billion programme to lend against securities backed by student, auto, credit card and business loans, TALF could expand to $1 trillion and include troublesome mortgage and debt securities from banks.

-- The Fed is buying highly rated, U.S.-dollar denominated, three-month commercial paper through a special purpose vehicle to run until Oct. 30.

-- In January, the Fed started a programme to buy $100 billion in the direct obligations of housing-related government sponsored enterprises -- Fannie Mae, Freddie Mac and the Federal Home Loan banks -- and $500 billion in mortgage-based securities backed by Fannie Mae, Freddie Mac and Ginnie Mae.

* EUROPEAN CENTRAL BANK
-- ECB policymakers have said they considering all options to extend its monetary toolbox further, although they stress that no decisions have been taken.

-- Economists polled by Reuters give a 40 percent chance to the ECB embarking on quantitative easing in the coming months. [ECB/INT]

* BANK OF JAPAN
-- Bank of Japan policymakers have not ruled out a return to quantitative easing, although they have said it is unlikely or at least not needed for now.

-- While not constituting quantitative easing, the Bank of Japan is to buy up to 1 trillion yen ($10 billion) of corporate bonds maturing within a year. [ID:nT220574]

- It is also buying up to 1 trillion yen worth of shares held by Japanese banks. BOJ plans to sell the shares from Apr 2012 to Sept 2017.

* BANK OF ENGLAND
-- The BoE has asked for permission from the British government to formally embark on full quantitative easing that would involve the purchase of gilts and other commercial assets using new money.

-- Finance minister Alistair Darling is expected to give the BoE the go-ahead to purchase between 40-150 billion pounds ($56-211 billion) with which to purchase assets on Thursday. [ID:nL2700943]
-- The central bank already buys commercial paper under its Asset Purchase Facility. However, the scheme does not constitute quantitative easing as it is financed by the issuance of Treasury bills.

* OTHER CENTRAL BANKS
The Bank of Canada said on March 3 it would engage in quantitative easing if required after it cut its benchmark interest rate to a record low of 0.5 percent.

The Swiss National Bank has said it is studying unconventional measures such as foreign exchange interventions and quantitative easing to improve economic conditions.

The Bank of Israel said on Feb 16 it would start buying government bonds on the secondary market to improve liquidity.

inspector_monkfish

09:06 05Mar09 Halifax reports collapsing house prices

(GBP) Halifax reports that its measure of UK house prices fell -2.3m/m in Feb,
after a surprising 1.9% m/m increase in Jan. This is slightly worse than the
2.0% m/m decline predicted by the market and more than reverses the Jan
increase. The annual rate thus falls to -17.7% in the 3mths to Feb, from -17.2% y/y in the 3mths to Jan, which augurs unfavourably for future household spending and for banks' balance sheets. At the margin, this latest development should be seen as GBP -ve.

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gbp/eur trading at 1.1280

inspector_monkfish

10:50 GMT - Ldn (05 Mar) - [TWISTING THE KNIFE IN] After Sterling was battered v the Eur into the end of 2008/early 2009 with a talk of a test of parity, it may now be time for the UK currency to turn the screws on the Eur. We would look to go short Eur-Gbp at the current level (ref 0.8884) for an
eventual target of 0.8300, (stop at 0.8975). While the UK may be moving
to quantitative easing to stoke the fires of recovery, the ECB is far more
emasculated, and the latest GDP was far more negative in the detail. This,
plus the latest slate of sentiment data, should keep further ECB rate cuts
in train. But the nature of the Eurozone is likely to hamper ECB using
non-conventional means - the BoE is by no means so gelded. Whilst pumping
money is normally associated with currency weakness, l-term it could reap
dividends on relative economic performance, and this side of the balance
sheet could hit Eur-Gbp. In addition, the cross has been in a triangular
consolidation, and a break blow 0.8808 (0.8726 to confirm) could set up a
big down move.



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0.83 = 1.2048
0.88 = 1.1364

inspector_monkfish

1mth Euribor fixed at 1.447
3mth Euribor fixed at 1.757

ECB meeting at 12.45 today

inspector_monkfish

LONDON --The Bank of England Thursday became the first European
central bank to implement quantitative easing policy, as it announced it would buy up to GBP75 billion mostly in medium and long-term gilts over the next three
months. At its regular meeting, the BOE's Monetary Policy Committee also cut its key
interest rate by 50 basis points to 0.5%.

In a statement accompanying the decision, the MPC said that the gloomy
outlook for consumer spending and business investment made radical action
necessary to prevent inflation dropping sharply below its 2% target medium term.

The MPC has projected the U.K. economy to contract by around 4% at its trough in the middle of this year, but pick up fairly rapidly from that point and return
to trend expansion of around 3% in the second half of 2010.

Of 13 economists polled by Dow Jones Newswires last week, 11 had tipped the MPC to start lifting the money supply through the purchase of public and private sector securities this month.

Most also thought the bank would cut rates by 50 basis points, with 17 of the 18 economists questioned predicting the key rate would fall to 0.5% in March, and only one expecting no change.

inspector_monkfish

12:45 05Mar09 RTRS-ECB SAYS CUTS BENCHMARK INTEREST RATE
12:45 05Mar09 RTRS-ECB SAYS CUTS BENCHMARK INTEREST RATE BY 50 BPS TO 1.50 PCT
12:45 05Mar09-ECB SAYS SETS BENCHMARK REFINANCING RATE AT 1.50 PCT FROM 2.0 PCT (REUTERS POLL 1.5 PCT)
12:45 05Mar09-ECB SETS MARGINAL LENDING RATE AT 2.50 PCT VS 3.0 PCT, OVERNIGHT DEPOSIT RATE AT 0.50 PCT VS 1.0 PCT
12:47 05Mar09-ECB cuts rates by 50 bps to 1.5 pct as expected

FRANKFURT, March 5 (Reuters) - The European Central Bank cut its benchmark interest rate by 50 basis points to a record low 1.5 percent on Thursday as the economy is diving and inflation is well below target.

The cut, in line with consensus forecasts, marks the fifth easing since October as the financial crisis is biting hard into the euro zone economy, which is already in recession, and inflation is expected to fall further.
All 78 economists in a Reuters poll had expected the ECB to cut rates, and all but two of them had forecast a half percentage point cut.

ECB President Jean-Claude Trichet will explain the Governing Council's decision at a news conference at 1330 GMT. He is expected to justify the cut by pointing to diminishing upside risks to inflation, which was 1.2 percent in February, well below the ECB's target of below, but close to 2 percent.

The ECB also set new rates for its overnight facilities. From March 11, funds borrowed from its marginal lending facility will attract an interest rate of 2.5 percent and overnight deposits will pay 0.5 percent.

dealsearcher

Pound / euro currently 1.124. With all of these interest rate moves and QE today how is this going to effect the pound / euro? Will the moves just cancel each other out?