Markets’ hopes that the ECB and the Fed are readying to activate its printing presses again made a turn for the worse on Wednesday.
After the ECB "held the fire"on today's monetary policy meeting by leaving rates unchanged, president Mario Draghi noted that many stress indicators has seen an improvement since Q4-2011, despite recent market jitters, which suggests "the ECB is not contemplating another 3Y LTRO at this stage", according to Thomas Costerg and Sarah Hewin, Analyst at Standard Charted, addiing " Draghi further highlighted that the influence of the previous two 3Y LTROs was still not exhausted."
The best barometer to gauge market sentiment on more easing by the ECB is the yellow metal, which tumbled from session highs today, printing a daily bearish engulfing candle vs Euro after sharp sell-off from levels above critical 1300 handle.
On the Fed's domain, a dismal NFP number last Friday heightened fears QE3 may start to be discounted by the market. CNBC, Bloomberg and other media outlets have certainly given a lot more attention to the topic. At this point though, its all about second-guessing waiting for the real deal in the form of Fed's Ben Bernanke testimony to congress on the state of the economy, which will most definitely help decipher what route the Fed may want to take as Operation Twist comes to to an end end of June.
There is some conflicting signals on how/if QE3 will come about if one is to be guided by today's price action. The Dow Jones Industrial Average had its best day since December 20 on what may be understood as rising hopes the QE3 trade is coming. Comments from Chicago Fed President Charles Evans yesterday gave reasons for it, as he called for additional aggressive easing to combat a faltering recovery.
However, if one then looks at Gold, it looks like the market is not so confident on the QE3 trade, as the precious metal saw a major slide from highs at 1640 to return at last open 1620 presently. A more positive than expected Fed Beige Book made pro-QE3 supporters certainly more cautious.
Christopher Vecchio, Currency Analyst at DailyFX, notes: "In light of recent commentary by the FOMC and voters, we believe that Chairman Bernanke will ultimately disappoint market participants, and we expect a sharp rebound by the US Dollar on Thursday.”
Meanwhile, as some reports may start to suggest not to hold once's breath until more easing happens, Gavyn Davies, Macroeconomics Editor at FT helps to clear up the : "This policy change may take a couple of months to transpire, although it does indeed seem to be on the way. The pause in monetary easing which became clear in February/March has once again proved to be only temporary."
Source: FxStreet
After the ECB "held the fire"on today's monetary policy meeting by leaving rates unchanged, president Mario Draghi noted that many stress indicators has seen an improvement since Q4-2011, despite recent market jitters, which suggests "the ECB is not contemplating another 3Y LTRO at this stage", according to Thomas Costerg and Sarah Hewin, Analyst at Standard Charted, addiing " Draghi further highlighted that the influence of the previous two 3Y LTROs was still not exhausted."
The best barometer to gauge market sentiment on more easing by the ECB is the yellow metal, which tumbled from session highs today, printing a daily bearish engulfing candle vs Euro after sharp sell-off from levels above critical 1300 handle.
On the Fed's domain, a dismal NFP number last Friday heightened fears QE3 may start to be discounted by the market. CNBC, Bloomberg and other media outlets have certainly given a lot more attention to the topic. At this point though, its all about second-guessing waiting for the real deal in the form of Fed's Ben Bernanke testimony to congress on the state of the economy, which will most definitely help decipher what route the Fed may want to take as Operation Twist comes to to an end end of June.
There is some conflicting signals on how/if QE3 will come about if one is to be guided by today's price action. The Dow Jones Industrial Average had its best day since December 20 on what may be understood as rising hopes the QE3 trade is coming. Comments from Chicago Fed President Charles Evans yesterday gave reasons for it, as he called for additional aggressive easing to combat a faltering recovery.
However, if one then looks at Gold, it looks like the market is not so confident on the QE3 trade, as the precious metal saw a major slide from highs at 1640 to return at last open 1620 presently. A more positive than expected Fed Beige Book made pro-QE3 supporters certainly more cautious.
Christopher Vecchio, Currency Analyst at DailyFX, notes: "In light of recent commentary by the FOMC and voters, we believe that Chairman Bernanke will ultimately disappoint market participants, and we expect a sharp rebound by the US Dollar on Thursday.”
Meanwhile, as some reports may start to suggest not to hold once's breath until more easing happens, Gavyn Davies, Macroeconomics Editor at FT helps to clear up the : "This policy change may take a couple of months to transpire, although it does indeed seem to be on the way. The pause in monetary easing which became clear in February/March has once again proved to be only temporary."
Source: FxStreet