ECB’s Coeure: Greece must repay debt

Posted by Forexsq 4 hours ago (http://www.marketwatch.com)
img The new Greek administration will have to repay the country’s debt, which is ultimately owed to taxpayers in the eurozone, even though talks on a debt-maturity extension are possible, European Central Bank executive board member Benoît Coeuré said Monday.

The new government to be formed in Greece in the coming days will have to respect its commitments and continue repaying its debts as talks on debt maturity start, Coeuré said in an interview with French radio station Europe1.

His comments came after Greek voters on Sunday handed victory to radical left party Syriza, led by Alexis Tsipras, in a popular rebellion against the bitter economic medicine Greece has swallowed for five years and as a rebuke to fellow European countries that prescribed it.

“Mr. Tsipras must pay, those are the rules of the game, there is no room for unilateral behavior in Europe, that doesn’t rule out a rescheduling of the debt,” Coeuré said. “If he doesn’t pay, it’s a default and it’s a violation of t

ECB easing lifts shares and bonds, but euro tumbles

Posted by Forexsq 2 days ago (http://www.reuters.com)
img The European Central Bank's plan to pump out about 1 trillion euros to revive the euro zone economy put stocks in the region on track for their best week since 2011 but hammered the shared currency.

The appetite for riskier appetites was intense with traders also driving Italian, Spanish and many other euro zone bond yields to new record lows and snapping up emerging market stocks to put them on track for their biggest gain in 10 months.

Oil prices rose on hopes for a boost to global growth from the ECB's landmark move, while the death of Saudi Arabia's King Abdullah added to uncertainty over the plans of the world's biggest crude exporter.

"What the market is focusing on is the potentially open- ended element of the (ECB QE) program," said Emile Cardon, the euro zone strategist at Rabobank. "And what we also see this morning is that euro zone data has been slightly better than expected."

There were nerves about cliffhanger elections in Greece on Sunday that polls suggest

Storms ahead for emerging market sovereigns

Posted by Forexsq 2 days ago (http://www.reuters.com)
img Black clouds are forming over emerging markets as analysts warn of a deluge of rating downgrades on the horizon, potentially triggering a torrent of forced selling as some investors exit their positions.

"Not so long ago, the EM horizon was bright with potential rising stars in investor portfolios," said David Spegel, global head of emerging markets sovereign and credit strategy research at BNP Paribas. "Now, after a year of political upheaval and collapsing commodity markets, the EM sky is alight with potential falling angels."

Azerbaijan, Kazakhstan, Russia, Bulgaria, South Africa and Turkey are the sovereigns at greatest risk of losing their investment grade status this year, while sub-investment grade Angola, Gabon, Algeria, Venezuela and Nigeria are expected to drop further into junk status.

A strong dollar, plunging oil prices, geopolitical tensions and faltering growth have battered many emerging market credits over the last few months.

The EMBI Global index, the be

On Day One of ECB QE, Draghi Gets Much of What He Wanted

Posted by Forexsq 2 days ago (http://blogs.wsj.com)
img European Central Bank President Mario Draghi must be smiling this morning. His launch Thursday of a new EUR60 billion-per-month bond purchase program had all the intended effects in financial markets. Stocks rose, government borrowing costs fell and the euro sank in the day after the ECB announcement.

The Stoxx Europe 600 index was 1.2% higher by midmorning Friday. France’s CAC 40 rose 1.4%, shrugging off a weaker than expected composite PMI reading for December, while Germany’s DAX climbed 1.2%—another record high. S&P 500 futures also were up.

Yields on 10-year and 30-year German government bonds sank to 0.32% and 0.97% respectively, while Spanish and Italian 10-year bond yields fell to 1.30% and 1.46%. The 10-year U.S. Treasury yield declined to a low of 1.78%.

Meantime the euro sank to $1.1229, its lowest point since August 2003.

A few quick observations on the market’s reaction:

–All that tut-tutting from analysts before the ECB announcement that quantitative easin

Draghi Wins Soros’s Kudos as Euro Drop Accelerates

Posted by Forexsq 2 days ago (http://www.bloomberg.com)
img As the euro plunged in 2012 amid a raging debt crisis, Mario Draghi pledged to do “whatever it takes” to bolster confidence in the exchange rate and save the European Union. Now, he’s implementing policies that would debase the currency, this time to rescue the region’s economy.

By committing more money for government-bond purchases than forecasters anticipated, the European Central Bank president sent the euro tumbling to an 11-year low of $1.1115 today, while the cost of options protecting against further losses increased. The 1.1-trillion-euro ($1.25 trillion) program announced by the ECB prompted strategists at HSBC Holdings Plc and UBS AG to cut outlooks for the 19-nation currency.

“It’s pretty overwhelming,” billionaire investor George Soros, 84, said at an event Thursday in Davos, Switzerland. The “powerful” set of measures exceeded expectations, he said, and “I think it will be effective.”

While policy makers insist they don’t target the exchange rate, a weaker euro i

How Super Was Mario?

Posted by Forexsq 2 days ago (http://krugman.blogs.nytimes.com)
img Mario Draghi pulled off a political triumph on QE, coming in with a program that is bigger and more open-ended than anyone expected. The goal was to jolt expectations, to convince markets that there has been a fundamental shift toward aggressiveness. And markets certainly moved in the right direction. But how much was achieved? Inquiring minds want to know — or at least I do. So I’ve done some back-of-the-envelope calculations on the question of how much Draghi managed to move inflation expectations.

A side note: many people seem to use the 5-year-5-year forward swap rate here, but that seems very strange to me; it’s a measure of expected inflation, not from 2015 to 2020, but of 2020 to 2025. Why, exactly, should that be the measure? It’s much more natural, I’d think, to just use 5-year or 10-year break-evens, the spread between index and nominal bonds.

So look at German yields (Germany because it’s presumably the safe asset of Europe). A week ago German index bonds coming due i

Euro records largest weekly loss since September 2011

Posted by Forexsq 1 day 5 hours ago (http://www.marketwatch.com)
img The euro recorded its largest weekly decline against the dollar since September 2011 Friday.

The euro shed 3% of its value against the dollar this week, with most of the loss happening during the final two trading days of the week, after the European Central Bank announced a stimulus program that was larger than the market anticipated.

The euro EURUSD, +0.00% traded in a tight range around $1.2400 against the greenback after falling to $1.1115, its lowest level since September 2003. The shared currency traded at $1.1361 late Thursday. The euro EURJPY, +0.00% also pulled back from ¥130.93, its lowest level against the Japanese yen since October 2013. The shared currency was worth ¥132.4500 in recent trade, EURJPY, +0.00% compared with ¥134.65 Thursday.

As of Tuesday, net-short positions held against the euro increased by 5% to $26.1 billion, according to data released by the Commodity Futures Trading Commission Friday. Camilla Sutton, chief foreign-exchange strategist at Sco

Euro Sinks as Anti-Austerity Syriza Set for Vote Victory

Posted by Forexsq 16 hours ago (http://www.bloomberg.com)
img The euro fell as Greece’s prime minister conceded defeat in national elections, with the Interior Ministry projecting anti-austerity party Syriza will win enough votes to put it close to a majority.

The 19-nation currency neared its weakest level in more than 11 years against the dollar, after tumbling last week on the European Central Bank’s plan to pump 1.1 trillion euros ($1.2 trillion) into the economy to stoke inflation. The euro may extend losses as victory for Syriza leader Alexis Tsipras raises the prospect of Greece potentially exiting the currency bloc, according to Brian Jacobsen, chief portfolio strategist at Wells Fargo Asset Management in Menomonee Falls, Wisconsin.

“If Syriza indeed gets more than a third of the votes, it can get a majority in the Greek parliament without needing to form a coalition government,” Jacobsen said by e-mail after exit polls pointed to the left-leaning party winning the vote. “This will likely continue pushing the euro lower on the remo

Euro steadies despite Greek worries - Forex Trading News

Posted by Forexsq 4 hours ago (http://www.reuters.com)
img The euro regained a foothold in early deals in London on Monday, investors choosing to take some profit on two days of dramatic losses after the results of elections in Greece sent the single currency to an 11-year low.

The single currency fell as low as $1.1098 after projections showed anti-austerity party Syriza won 149 seats in the 300-seat Greek parliament, setting Athens on a collision course with international lenders and potentially threatening its place in the euro.

However, it had recovered to trade higher on the day at $1.1224 by 0748 GMT. Dealers and analysts in London said the most likely next move was still down but that the European Central Bank's announcement of outright money-printing last week had insulated European markets from the fallout of the Greek vote.

"I think on the day people will look to re-sell 1.1250/60 or less," said Stephen Gallo, European head of FX strategy with Bank of Montreal in London.

"The fact that the ECB's QE programme has already

Euro Rises as Syriza Win Judged as No Threat to Bloc; Yuan Drops

Posted by Forexsq 4 hours ago (http://www.bloomberg.com)
img The euro climbed for the first time in three days against the dollar amid speculation a victory by the anti-austerity Syriza party in Greek elections won’t push the nation to exit the currency bloc.

The shared currency earlier touched an 11-year low versus the dollar after Syriza, whose leader has pledged to renegotiate Greece’s international bailout, won 149 out of a possible 300 seats in Parliament in weekend elections. It had tumbled last week after the European Central Bank announced plans to pump 1.1 trillion euros ($1.2 trillion) into the economy to revive inflation. China’s yuan declined for a second day versus the dollar.

“We saw the euro selling off initially, but now we’ve had a bit of a bounce,’ said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. ‘‘We’ve moved such a long distance over a short period of time that maybe some people think it’s time to lighten positions. We had a fairly strong assumption of who was goin

Swiss sight deposits surge after SNB abandons franc cap

Posted by Forexsq 4 hours ago (http://www.reuters.com)
img The amount of cash commercial banks hold with the Swiss National Bank rose the most since at least March 2013 last week, indicating the central bank may have intervened to keep the franc down despite scrapping a cap against the euro.

Switzerland's central bank shocked financial markets 11 days ago by abandoning a three-year-old cap on the franc, sending the currency soaring against the euro.

Sight deposits surged to 365.486 billion Swiss francs last week, up from 339.614 billion francs in the prior week, data from the SNB showed on Monday.

The SNB can expand sight deposits through foreign exchange swaps and repurchases of its own debt.

Sight deposits can be an indication of how inclined banks are to find an ultra-safe home for their money. In the past they have been watched by economists for indications the SNB was defending its 1.20 per euro cap, which it abandoned in January.

The SNB is seeking to discourage new flows into Swiss francs by imposing an interest rate of

Dollar Rises Against Euro, European Currencies After ECB Move

Posted by Forexsq 3 days ago (http://www.wsj.com)
img The dollar soared against the euro on Thursday after the European Central Bank announced a massive asset-purchase program, a move that also had ripple effects among European currencies apart from the euro.

The euro sank below $1.14 for the first time since November 2003 in a decline that ranked among its largest ever. The single currency reached $1.1316 before rebounding slightly to trade at $1.1337 in late-afternoon trade, falling 2.4% on the day.

The selloff also reverberated in other currency markets with close economic ties to the eurozone. The British pound slid 1.1% to $1.4980, a new 18-month low. The dollar also posted gains against other developed-market European currencies, such as the Swiss franc, the Norwegian krone and the Swedish krona.

ECB President Mario Draghi announced the ECB will buy a total of €60 billion ($69 billion) a month in assets, including government bonds, debt securities issued by European institutions and private-sector bonds. The purchases will

Family Dollar stockholders approve merger with Dollar Tree

Posted by Forexsq 3 days ago (http://www.wbtv.com)
img Family Dollar shareholders approved the merger with Dollar Tree on Thursday morning by voting to sell the Matthews-based retailer to Dollar Tree. The decision comes after a protracted battle with another company that attempted a hostile takeover.

Tennessee-based Dollar General had offered Family Dollar more per share than Dollar Tree, causing shareholders to question the deal Family Dollar board members wanted with Dollar Tree, but ultimately Family Dollar executives were able to convince a majority of investors that an agreement with Dollar General could run into problems with the Federal Trade Commission.

In Thursday morning's meeting, Family Dollar CEO and Chair Howard Levine said he agreed with shareholders who questioned the board's recommendation to move forward with Dollar Tree on at least one point. “Economically, the [Dollar General] deal on paper is better than the Dollar Tree deal,” he said. “But you also have to think about whether the deal will close.”

When one s

Euro Slides to 11-Year Low Against Dollar After ECB Move

Posted by Forexsq 3 days ago (http://www.wsj.com)
img The euro fell sharply Thursday and stocks on both sides of the Atlantic climbed after the European Central Bank surprised investors with a bigger-than-expected stimulus plan aimed at righting the region’s struggling economy.

The single currency shed about 2% against the dollar to trade at $1.137, its lowest level in 11 years. The euro has weakened by about a fifth against the dollar in the last six months.

The ECB’s stimulus plan was much anticipated by traders. But the size of the asset-purchase program announced by ECB President Mario Draghi was larger than many had forecast.

“All eyes were on Mario Draghi and he has delivered a bigger bazooka than investors were expecting. This will satisfy markets for now,” said Mauro Vittorangeli, a senior portfolio manager at Allianz Global Investors.

The ECB announcement also buoyed stocks and bonds on both sides of the Atlantic. The Stoxx Europe 600 added 1.7% to close at a fresh seven-year high and the S&P 500 gained 0.7%.

“Thi

Euro falls to multiyear lows against dollar, yen and pound

Posted by Forexsq 3 days ago (http://www.marketwatch.com)
img European Central Bank President Mario Draghi’s Thursday announcement of a €60-billion-a-month government-bond buying program sent the euro tumbling to multiyear lows against its main rivals.

The euro was worth $1.1372 in recent trade, its lowest level since September 2003, compared with $1.1588 late Wednesday in New York. The shared currency EURJPY traded at ¥134.54, its lowest level since November 2013, compared with ¥136.50 Wednesday. Meanwhile, the pound traded at £0.7573, compared with £0.7660 Wednesday.

Following the ECB’s announcement, HSBC reduced its year-end forecast for the shared currency, which further weighed on the euro’s value against the dollar. The bank now expects the euro to hit $1.09 by the end of the year, down from $1.15.

The ECB surprised the market by announcing that the bond purchases would be larger than expected, analysts said. The Wall Street Journal reported Wednesday that the European Central Bank’s executive board would propose buying about €50
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