Italy Gives Greek-Like Warning Ahead of the ECB Meeting
Sometimes in a thunderstorm, there is a period of silence before the loudest blast. That period of silence could be felt before today’s ECB announcement, as the constant chatter we have seen over the past few days following ECB’s Draghi’s pro-Euro comments, suddenly came to a halt. Beyond the monthly interest rate, traders are expecting a decision on the possibility of buying struggling governments’ bonds or giving the ESM a banking license.
One of the few European officials who spoke today was Italian Prime Minister Mario Manti, who said that the government’s rising lending prices could lead to a backlash of an anti-Euro government. Monti added that Italy is strongly in favor in the sale of Euro bonds.
Spain also held a bond sale today where benchmark 10-year bonds were sold for 6.647% yield, higher than the 6.43% yield at July’s sale. However, the total sale brought in 3.13 billion Euros, higher than the 3 billion maximum target.
The other major news for the day was the Bank of England holding its interest rates and asset purchase program unchanged. The news was as expected and did not affect Sterling trading.
In other news, Swiss PMI for manufacturing was surveyed as contracting at 48.6 for July, but still better than expected. UK construction unexpectedly expanded in July, according to a PMI at 50.9. Also, Euro-zone produce prices dropped more than expected according to the PPI for June.
EURUSD has reversed much of yesterday’s losses and is inching back towards 1.2300 in today’s session. The psychological 1.2300 line could provide resistance.
Again, the ECB rate decision and the following press conference could produce highly volatile trading for the rest of the day’s trading session.
EURUSD 15-minute: August 2, 2012
--- Written by Benjamin Spier, DailyFX Research
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