The German Federal Constitutional Court ruled that the bond buying plan from the ECB is allowable, but has said Germany can put conditions on certain aspects of the plan and the manner it is carried out. Investors by and large in the short-term will be pleased with the decision because it will certainly allow for risk takers to venture forth knowing that the ECB has managed this policy victory.
The EUR continues it upwards movement against the USD and there can be no denying that this foray into the ECB’s ‘confidence game’ has worked extremely well for the stability of the Single Currency. Mid-term and long-term risks certainly will be heard from again, but for the time being the Single Currency will have relatively smooth sailing. Tough government fiscal decisions, recession, and deficits however are not about to disappear for many nations in Europe and will continue to mount in the future – which will certainly provide enough ammunition for skeptics. For the time being though it appears the EUR will remain a currency that will find takers.
Gold and Crude Oil are testing the highs in their ranges. The JPY is also growing stronger as are the GBP and AUD against the Greenback. Wholesale Inventories and Crude Oil Inventories data will come from the States today, but it is the Federal Reserve that is now the focal point and their FOMC Statement is due tomorrow. All eyes will be on the wording of the statement Thursday and the ‘new policy’ that most investors are betting on via a new stimulus package. What that package will be exactly is the big question.
European bourses have followed their Asian counterparts today and risen. Wall Street may see further risk taking today as well. Investors seem to be marching in step and it is beginning to take on aspects of a Central Bank ‘confidence game’ mania in which all things will work out for the better globally with mere words. Short-term for traders willing to take on risk this may prove to be profitable, unfortunately for those who are looking for quantified numbers that prove growth and employment will be achieved there is still little proof in the pudding.