The ECB, Gold and U.S. dollar – This morning the European Central Bank (ECB) surprised global markets by slashing key interest rates to a new record low of 0.05% from 0.15%.
Since the Fed many non G3 currencies have made higher lows against the Dollar. We think some weaker U.S. data today on housing along with better external data for many of the FX crosses we are watching means this trend can continue.
The euro zone crisis has been going on now for two years and the worst is not over yet. This has sent traders looking for vehicles to profit from the crisis as well as hedging their portfolio. One vehicle that traders turned to has been ETFs. ETFs are a great way to gain exposure to markets with a stock market account without having a futures/commodities or forex account.
Hopium continues to fade in the euro zone as traders fear the European Central Bank is kicking the can down the road again.
After the ECB indicated there could be “merit” in providing the euro zone’s bailout fund with a banking license, and a growing number of FOMC committee members indicated additional stimulus may be needed to spur U.S. job growth, speculation ramped up as the euro pushed higher against the U.S. dollar.
The week is starting out slow for the euro against the U.S. dollar as the U.S. session comes into full swing. The euro remains flat ahead of the euro zone finance ministers’ meeting later today over the continuing debt crisis.
I’ve been getting questions on how to play the European Union summit starting Thursday. Those that know me know I like to play events like this within the currency markets. The EU summit event should lend itself for readers to play summit results through both Forex markets and currency ETFs.
Euro zone markets remain under pressure with the EURO STOXX 50 dropping 2.57%, the French CAC 40 falling to 2.24%, and the euro zone’s strongest component falling hard with the Germany’s DAX 30 falling off a cliff by 2.09%.
When most people think of investing, they typically think of buying shares of a company’s stock to benefit from a short- or long-term appreciation in the value of the company. They don’t think of short selling.