OVERVIEW 01-08/07/2013 Recently the Euro has fallen sharply. One of the reasons for that was Draghi’s statement about further perspectives of interest rates. To be more specific it was the fraise about current rates of the ECB remaining on the same or lower level in the long time period. He refuted the idea that fixation of lower rates was response to FRS actions. It is also quite remarkable that the ECB is not setting any goals, by reaching which there will be a period of rates increase. The FRS is going to raise the rate only after unemployment decline to 6.5%. But for the ECB such benchmarks are not suitable as the ECB mandate doesn’t imply an active interference in a labor market. And the Euro zone is too fragmented in addition. For instance, in Spain unemployment rate breaks records at the level of 26.9%. At that no significant improvement is expected even according to official forecasts. Next year a figure is not likely to drop below 25%. On the other hand in Germany unemployment is on the record low level in recent decades. That is why a general level in Europe is quite deceptive. Last summer Draghi put an end to growth of interest rates hinting at possibility of regulators’ intervention in the debt market. Everyone remembers his words about regulator achieving a significant improvement without spending a single cent (unlike the FRS). And on Thursday Draghi claimed, that the program of bonds purchase could be launched any moment. This is quite important against the background of uncertainty growth in Italy. The IMF has downgraded its forecast on Italian GDP dynamics from -1.5% to -1.8% by the end of current year. Because of increasing unemployment, debts on credits continue to grow every month. Because of that the IMF asked the ECB to help Rome more actively in solution of these problems. Earlier one of the measures was the ECB participation in program of buying credits of small and medium businesses, but then Germany objected that. At last we get to the news that was in focus of all markets in the end of last week. We are talking about NFP of course. Employers in the US hired 195K new workers (outside agricultural sector). It suggests a significant improvement on labor market. Such growth of employment occurred against the background of an abrupt revising of data in April and May, as during those two months employers hired 70K more employees than had been expected beforehand. Nevertheless the unemployment level remained the same and constituted 7.6%. It was a bit higher than expected (7.5). Anyway it didn’t change the positive picture in general. Apparently good news from the US is going to shape trading of the coming week.
Posted on: Mon, 08 Jul 2013 12:11:18 +0000
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