Germany Sends Mixed Messages About Possible ECB Bond Purchases
We’ve become accustomed to mixed messages from different leaders within the Euro-zone, but today we saw seemingly contradicting messages from German officials. German Deputy Spokesman Georg Streiter said the government backs European Central Bank action as announced by Draghi and has no doubt the central bank will do everything within its mandate. Meanwhile, a Bundesbank spokesman said the bank is still opposed to bond purchases and CDU’s
It’s unclear if Streiter’s comments were intended to specifically support bond purchases, rather the spokesman might have been trying to instill a feeling of calm into the markets, as he also said the government urges ‘more calm’ in the Euro crisis debate.
Meanwhile, Italian PM Mario Monti did just the opposite of Streiter’s suggestion during an interview with Germany’s Der Spiegel magazine, where he continued to continued to talk about the impending dangers to the Euro if action wasn’t taken. Italy and Spain were both reported to be holding off from officially asking for help until they hear further details from the ECB about the possible bond buying program.
In other economic news, Greece’s annual inflation rate was measured at 1.3% in July. Halifax reported that annual house prices have remained steady due to static supply and demand, but prices were down 0.6% in July. Also, Euro-zone Sentix investor confidence was slightly better than expected, but still worse than July, reported at -30.3.
While all major European currencies gave back a lot of Friday’s gains against US Dollar in today’s session, the British Pound dropped the most. GBPUSD is down nearly a hundred points since last night’s open, currently trading right above 1.5500. Cable has been trading in a near-sideways channel over the past month, and most recently found support near 1.5500. 1.5717 has provided resistance for the near two-month trend.
GBPUSD 15-minute: August 6, 2012
--- Written by Benjamin Spier, DailyFX Research
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