The Vice-President of the ECB, Vitor
Constancio, gave an interview to a Dutch newspaper, which was published
yesterday. The central bank thought so much of it that they carried on their website,
and you can read the full article here.
While the piece commenced with a
discussion of the future of Eurozone Quantitative Easing (QE), which Constancio is confident will be carried to its advertised conclusion, the big
takeaway will be his assertion that there is, really, no longer a Greek issue.
Not only does he think that there will not be a Greek exit from either the Euro
or the EU as a whole, he believes that even if the “worst case scenario” were
to come about, the Euro would be able to survive. He says:
“Like everyone else, I am concerned. But I am also
absolutely convinced that the worst-case scenario will be avoided. At the same
time, everyone acknowledges that the degree of stress and vulnerability in the
euro area has totally changed. There are no signs of contagion.”
It has to be said that these
sentiments seem to be shared by both the bond markets and the Greek people.
While Greek bonds are in severe difficulty, and the country has effectively
been removed from that market, the bonds of all other Eurozone states are in a
very comfortable place indeed. So no contagion. News reports from Greece itself
indicate that opinion polls there are consistent in their findings that,
whatever about objections to austerity, a significant majority of the people of
Greece is in favour of remaining within the Euro system.
Reserve
Bank of Oz reduces core interest rates
The Reserve Bank of Australia finally
bit the bullet in the early hours of this morning, GMT time, and announced a
reduction in the core interest rate from 2.25% to 2.00%. The chart above shows
the, somewhat counterintuitive, rise in the Aussie against the US dollar, after
going through the obligatory bout of severe bi-directional volatility in the
minutes following the announcement.
This rise would have far more to do
with the Forex markets immediate perception of the real strength of the
Greenback, rather than any fundamentals that attach to the Aussie. It will also
be very interesting to see how the pair behaves in the coming hours and days.
Non-farm payrolls in the US on Friday will have a major bearing on the matter.
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