The euro received some support against the U.S. dollar as European Central Bank President Mario Draghi announced he will not be attending the Federal Reserve’s annual Jackson Hole summit this Friday.
Greek leaders met with the European leaders yesterday to strike a deal to extend the time period for previously agreed upon implementation of Greece’s austerity measures.
Speculation this week that the European Central Bank is actually working on creating policies to ease the euro zone debt crisis sent the EUR/USD to a roughly seven week high.
Gold prices continue to trade in a tight range of eight points in early European trading, in the upper half of the channel started back in mid-May. Gold bugs continue to hold out hope that European officials can somehow show significant signs of progress in battling the euro zone debt crisis during a meeting scheduled this week.
As mentioned in the Emerging markets morning brief earlier today, the euro zone is raising its ugly head once again. The European Central Bank (ECB) denied it was thinking about setting limits on yields of euro zone government bonds, first reported in Germany’s Der Spiegel, which sent the EUR/USD lower.
It’s another Groundhog Day scenario in developed and emerging markets, with market participants beginning to wavier (again) on speculation of central banks intervening and propping up global economies from an ever slowing growth trajectory.
In overnight trading developed and emerging markets moved higher on continued hope of central bank intervention. Emerging markets such as Hong Kong along with Japan rallied in the bottom half of trading on better than expected GDP growth from Germany.
China was the focal point overnight as equities in the emerging markets giant dropped over 1.5% on disappointment Chinese officials made no weekend stimulus announcement. The failure to ease prompted Merrill Lynch to downgrade China’s GDP forecast from 8% to 7.7%, citing economic concerns.
Asian and emerging markets are ending the week quietly lower on broad bases as more economic data was released, reinforcing that China is indeed slowing.
Hopium continues to fade in the euro zone as traders fear the European Central Bank is kicking the can down the road again.