Not long after opening in Europe we saw a decisive break through a resistance of 1,30 on the EURUSD, and a sharp appreciation of the British pound to the dollar as well. These moves rely to a significant extent on a bullish sentiment on stock markets and investors do hope that central banks gatherings in two major advanced economies on Wednesday will translate into an influx of more optimism. Both the Fed and the BoJ need to work on untypical solutions as short term interest rates are not much higher than zero. Fed indicated that on top of agency and high quality mortgage debt it may be willing to purchase long term government bonds and investors might be looking for more details. Bank of Japan started a talk of purchasing subordinated debt issued by banks to help them replenish the capital erased by loses.
On the data front we face industrial output in the US today, housing data tomorrow and inflation on Wednesday. In Germany the ZEW index is released tomorrow and in the UK unemployment on Wednesday. The S&P500 faces a resistance at 800 points and the EURUSD at 1,3330 and if nothing spoils a sentiment we might be getting there.
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Przemysław Kwiecień  |
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