Bitcoin price today: subdued below $89k amid risk-off mood; key US data awaited
EUR/USD
Although the ECB eased the monetary policy further last week and even surprised many by cutting the deposit rate to zero, the central bank continues to avoid resurrecting its SMP program. As such, it looks increasingly likely that the sovereign spreads will remain elevated and in turn put further pressure on debt reduction programs that are being implemented by Italy and Spain. Worst case scenario is that the soon to be operational EFSF/ESM programs will come at a stage when the two nations are simply incapable of financing themselves and a full scale bailout will be required. The fact that such risks cannot be completely discounted leads to believe that the EUR will remain “credit-risk” trade until lawmakers in the bloc put their political differences aside for the good of the joint project.
GBP/USD
Although the BoE also announced more monetary policy easing, the latest boost to the Asset Purchase Facility (APF) by GBP 50bln is unlikely to debase the currency by a significant amount. This is largely due to the fact that not only risks of a sovereign default in the UK are extremely small, but also that BoE’s policy easing should help offset the fiscal tightening as implemented by the government and boost growth.
USD/JPY
Although risk-averse flows stemming from the uncertain economic outlook surrounding the eurozone are expected to dominate the week yet again, speculation of more monetary policy easing by the BoJ should offset some the flow and drive the pair higher.
Although the ECB eased the monetary policy further last week and even surprised many by cutting the deposit rate to zero, the central bank continues to avoid resurrecting its SMP program. As such, it looks increasingly likely that the sovereign spreads will remain elevated and in turn put further pressure on debt reduction programs that are being implemented by Italy and Spain. Worst case scenario is that the soon to be operational EFSF/ESM programs will come at a stage when the two nations are simply incapable of financing themselves and a full scale bailout will be required. The fact that such risks cannot be completely discounted leads to believe that the EUR will remain “credit-risk” trade until lawmakers in the bloc put their political differences aside for the good of the joint project.
GBP/USD
Although the BoE also announced more monetary policy easing, the latest boost to the Asset Purchase Facility (APF) by GBP 50bln is unlikely to debase the currency by a significant amount. This is largely due to the fact that not only risks of a sovereign default in the UK are extremely small, but also that BoE’s policy easing should help offset the fiscal tightening as implemented by the government and boost growth.
USD/JPY
Although risk-averse flows stemming from the uncertain economic outlook surrounding the eurozone are expected to dominate the week yet again, speculation of more monetary policy easing by the BoJ should offset some the flow and drive the pair higher.