fast entry - be careful on EUR/USD - develop my conclusions

hello,

as I promised in the morning. In this post, I develop my thought. Unfortunately, the lack of time I was not able to make it in the morning therefore I'm doing it now.

Here you have a link to the entry from the morning. <link :)>

The head of the European Central Bank during his speeches in Davos hinted that does not share much concern the International Monetary Fund, which argued that the ECB should be more actively counter the risk of the occurrence of deflation, it is something that is worth paying attention to. In recent weeks, the market pondered what instruments can use the European Central Bank as a further loosening of monetary policy. A passivity and vagueness by Mario Draghi resulted in the situation that occurred even argue that the ECB did not really have many options - the result was some "hesitation" future FRAs rates or an increase in short-term interest rate EURIBOR (though it happens to be more the result of declining excess liquidity in the banking sector as a result of early repayment of loans from the LTRO before the upcoming stress tests of banks).

In addition, a series of better macroeconomic data (PMI) meant that it was possible to think about as far as "doves" this year will be the ECB. Only that Mario Draghi gave last weekend another excuse to discuss what the Financial Times notes today. According to the head of the ECB to engage in quantitative easing program is the truth legally impossible, but the Bank could buy up loans from banks, which they give to the private sector if the economic situation in the area has deteriorated.

Irrespective of how controversial it would move, one thing is certain. Investors finally receive some arguments to the depreciation of the common currency. Especially since the addition at the end of last week was already seen some movement in the rates of EURIBOR and FRAs.

The chart number 1 in the previous post I showed that on Friday for Finance institutions occupy a lot of positions (probably short) which showed the volume, which was much larger than the previous days.

In addition, the quotation EURUSD are now significantly above that, as indicated by the spread yields of 2-year govt. Ger. bonds and the 2Y govt. USA bonds. Spread suggest a decrease again under 1.3600

chart 1. EUR/USD & spread of 2Y Ger and US bonds, 2014-01-27

regards,

oscarjp

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