The EURUSD spot exchange rate (above) shows how much the EUR, is currently worth in terms of the the USD.
The spike in the euro appears to be the result of private comments by European Central Bank president Mario Drgahi before a key a meeting. Murphy reports:
On Monday afternoon, the ECB president was supposed to be holding talks “in camera” with the economic and monetary affairs committee, prior to a full debate amongst MEPs on the EU’s economic future, with commissioner Olli Rehn...But in the meantime, Draghi is reported to have declared that so long as bond purchases by the ECB are restricted to maturities of three years or less, then the central bank would not be breaching state aid rules.Get ready for the BIG money printing. The ECB monetary policy committee meets on Thursday. The BIG money printing is likely to be approved at this meeting.
If the ECB prints more euros, the currency should logically diminish in value ( so it should be falling against the US dollar) but it also means the economic situation in the short term would improve in Europe (banks and savers garanteed by ECB intervention, creditors now able to be payed backed); also, confidence in the euro itself would be bolstered, presumably now backed by the ECB, so it should gain in value against the US dollar.
ReplyDeleteSo , will the EURO gain or fall against the US dollar ? Apparently the chart's answer : gain.
But is this true ?