European majors staged a strong comeback today following successful bond auctions in Spain and Italy. ECB’s meeting felt like a non-event, same as BoE. European equities were initially boosted by the auctions but was then dragged down by poor US economic data. Retail sales disappointed by growing 0.1% in December with ex-auto sales even dropping -0.2%. Initial jobless claims also rose back to 399k in the first week of 2012, hitting a six week high. DOW opened lower following the disappointment which in turn dragged down commodity currencies. Strong rebound in EUR/AUD from new record low also pressured Aussie a bit. Spain Treasury sold EUR 9.98b from three bond auctions today, doubling the target of EUR 5b. EUR 4.25b of new benchmark July 2015 note was at 3.384%, comparing to … Read entire article »

At two consecutive months of rate reduction, the ECB decided to leave the main refinancing rate at 1% at the January meeting. Policymakers would like gauge the impacts of previous rate cuts and liquidity provisions on the economy. Meanwhile, President Draghi indicated the 3-year LTRO has benefited banks and supported confidence. This is by no means an end of the easing cycle. Indeed, the ECB will like lower interest rates further should economic conditions deteriorate. Concerning the 3-year LTROs, the ECB stated they have been “providing a substantial contribution to improving the funding situation of the banks, thereby supporting financing conditions and confidence”. While stating that all the measures announced in December should provide additional support to the economy, the central bank stressed that the non-standard monetary policy measures are temporary … Read entire article »

By: Barbara Zigah The common currency Euro clawed for gains in Asian trading today, coming off a newly struck 16-month low, but analysts say that gains will be capped as Spain’s sovereign debt auction looms. The Spanish auction, and tomorrow’s by Italy, are seen as a confidence test for the Eurozone’s ability to meet funding needs. As reported at 11:57 a.m. (JST) in Tokyo the Euro was trading 0.2% higher at $1.2725, getting a bounce from support pegged at $1.2700. During the overnight hours on the EBS trading platform, the EUR/USD pair had struck $1.26615. The Euro also gained 0.2% against the Japanese Yen, rising off a low of 97.67 Japanese Yen struck earlier in the session. Later today, the European Central Bank will conclude its policy setting meeting, and investors … Read entire article »

European majors are generally weak as markets await ECB meeting as the main event of the week, as well as Spain’s bond auction. There are intense worry that the peripheral debt crisis is finally spreading to the core of Eurozone nations. It’s widely believed that ECB could play an important role, be it scaling up the bond purchases to limit yields below 7%, or any other number, or allowing ESM to be a bank to draw ECB funds to leverage. The three-year LTRO operation announced last month was a disappointment as the funds are mostly parked back to the central bank and Italian 10 year yield is still hovering around the unsustainable 7% level. At this moment, though, ECB seems not ready to add any additional measures and is expected … Read entire article »