British gilts and interest rate futures rose on Monday after Lehman Brothers’ filing for bankruptcy protection sparked a flight to safe-haven assets as stocks tumbled. The travails of U.S fourth largest investment bank came with news that Bank of America was buying Merrill Lynch, and the Federal Reserve was accepting stocks in exchange for cash loans for the first time. Read the rest of this entry »

ECB’s Papademos expects EU recovery from Q4 onwards. Papademos said the ECB expects a “sluggish rate of growth in the third quarter”, but added that “it is likely that the recovery will start at a faster pace in the fourth quarter”. Read the rest of this entry »

The sharp moves in the Euro versus the US dollar have been the result of expectations that, in the near-term, the Fed will hike rates and the ECB will cut. However, there are indications that these shifts in interest rates won’t even occur until 2009, and once this becomes clear to the markets, EUR/USD could see a turn higher. Read the rest of this entry »

The European Central Bank kept its benchmark interest rate at 4.25 percent as expected on Thursday, against a backdrop of high inflation and slowing economic growth in the euro zone. Financial markets’ focus now falls on ECB President Jean-Claude Trichet, who will explain the rate decision and announce updated economic projections made by ECB staff at a news conference at 1230 GMT. Read the rest of this entry »

The financial world is now split in two over who is right: the Fed, which decided to cut or the ECB, which raised in front of the credit crunch and an imminent global slowdown. At a time when the Federal Reserve has cut 325 basis points, the ECB has been bullish and finally decided to raise interest rates by 25 basis points. Over the same period, the Euro-area economy plunged, while on the other side of the Atlantic, things appeared to have bottomed. Read the rest of this entry »

The Euro recovered some ground in overnight trading, trying for a return above the 1.45 level. The analysts sees the possibility of rally back above 1.49 before the downtrend resumes. Near term support stands at 1.4440 while resistance is established at 1.4555. Sterling continued to remain under pressure, though downside momentum appeared to be losing steam. Support is seen at 1.7673, with resistance at 1.7845. Read the rest of this entry »

The Reserve Bank of Australia validated market expectations by cutting benchmark interest rates by 25 basis points, bringing borrowing costs to 7.00%. Meanwhile, Building Approvals fell -2.3% in July, sharply underperforming expectations of a 0.5% monthly increase. Forex traders will focus on Euro Zone Producer Prices in European trading. The metric is expected to print at the highest in over 20 years and may impact the market’s expectations for the timing of an ECB interest rate cut. Read the rest of this entry »

The European Central Bank, the U.S. Federal Reserve and other major central banks are planning to make it easier for banks to obtain liquidity in times of crisis, Financial Times Deutschland reported, without citing sources. Read the rest of this entry »

The Euro reversed US session gains overnight, falling to challenge the 1.47 level, while the British Pound dipped below 1.85 once again. A busy calendar awaits in the forthcoming European session. Most notably, Germany’s economy is expected to shrink in the second quarter, putting the metric at the worst in three years and taking the Euro Zone’s biggest economy within 3 months of recession. Read the rest of this entry »

The Euro fell sharply overnight as Asian markets responded to the turnaround in crude oil and other commodities seen in late Friday trading. Sterling followed, selling off to test the 1.84 level. The calendar is noticeably empty going into the European session, suggesting forex traders will continue to look to other markets for directional momentum. Read the rest of this entry »