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Forex Blog ECB rate cut in store
Forex Blog ECB rate cut in store
| ECB rate cut in store |
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| Thursday, 15 January 2009 00:12 | |||||||||
That the  ECB will cut rates tomorrow is not in question, the amount however is. There are three thoughts available here. The rate cut will be .25% signaling, in the words of Peter Wadkins from ThomsonReuters, that “they are living in denial; 50bp it’s pried in, if they cut 75bp, its positive they get it, but it’s still hardly a bold move.”So now that, the ball is in their court, what are the possible price moves associated each cut amount. 25bp Because “they don’t get it” the perceived lack of action to support growth policy will hammer the EURO. The move could happen quickly.  50pb This cut is most likely priced in currently. Going forward the inauguration of Obama and quick passage of another stimulus package and release or the second half of the TARP money may support the USD if nothing else is being done for the EURO. Germany has announced another 50billion. Too little, too late.  75bp With this cut, there may be enough support to put the USD on its heels, giving the new moon a chance to work its magic. 
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