After the two-day meeting, the central bank of the world’s largest economy said it would maintain a policy of “highly accommodative,” weighing on the greenback, at least until the end of 2014. While traders expected that the institution confirms his promise to leave its key interest rate to fluctuate exceptionally low (between 0 and 0.25%) until mid-2013, this extension shows that expansionary FOMC members do not rejoice around the recent improvement in economic indicators released in America.

The single currency benefit indirectly from this decision, especially as the bond market continues to enjoy some peace despite the lack of visibility about Greece and conditions of the second aid plan. After several figures have been quoted by various sources in recent days, Charles Dallara, head of the Institute of International Finance (IIF), representing the private creditors of Athens, reiterated his refusal to take on a voluntary basis, a discount of over 50%, as originally planned in late October. The old bonds would then be exchanged against new securities whose interest rate has yet to be finally determined. Although the IFF requires 4% of Europe such as the IMF requires an additional effort of the banking lobby.

Nevertheless, the noose is tightening for Greece, which will honor a refund of more than 14 billion euros on March 20 without prior agreement about the second international support.

Slight increases of 0.10% is recorded against the pound sterling (0.8363) and the Swiss franc (1.2749). In contrast, the European currency lost ground against the yen (- 0.4% to 101.1 yen).

Greece, which obviously only to find common ground with its creditors, seems out of fashion. “Investors seem to want to move on considering that the Greek drama can not end on a wild default destroy the efforts of the ECB ‘, says Barclays stock.

In general, the perception that the euro area is slowly but surely to a crisis is growing in the markets. “The European Summit (January 30) should give rise to more rapid progress in tax co-ordination in order to stimulate growth and employment. Access to bank financing to SMEs should be facilitated, “wrote the team elsewhere Changes of Pictet & Cie.

Also this morning, after a successful bond issue, interest rates at 10 years of SWFs in Italy fell to 5.87%, moving away a little over 7% of fateful. In Spain, the rate returned to 4.90%. However, the case of Portugal always worried and ’10 years’ Portuguese, to 14.87% at this hour in the morning exceeded the threshold of 15% for the first time.

If the U.S. economy could show signs of force, the deterioration of the situation is confirmed in Spain, where the unemployment rate rose 1.3 points to 22.8% last quarter. The number of unemployed in the country has surpassed the five million. But attention is focused elsewhere.

Traders should watch carefully, in the early afternoon, U.S. growth in the fourth quarter of 2011 expected to rebound to 3%, after slowing to 1.8% in Q3. Consumption is expected to rise 2.4%.

They seem, however, consider the interpretation that will give this figure as too vigorous growth could undermine the hopes for new measures of monetary support by the Fed. ‘Beyond the overall figure of growth, the market reaction may depend on the components of growth. It will identify those one-off items that will be more sustainable ‘, also prevents an analyst Aurel BGC.

U.S. another statistic for the index of consumer confidence as measured by the University of Michigan in January, which should come out unchanged at 74 points.

Euro recovers against the yen also (+ 0.43% to 98 yen) the sterling (0.19% to 0.8307), but settles on the other hand against the Swiss franc (- 0.13% to 1 , 2106 the euro franc).

Bond issues are closely followed. This morning, Italy issued 12 billion euros of state funds in the short term without suffering from lack of demand, even if rates remain high demand. The country has placed 8.5 billion euros a year to 2.73% as demand reached 12.5 billion. She also placed a short paper maturing on May 31 for 3.5
billion to 1.64% as demand reached 6.5 billion.

In the secondary market, the 10-year rates of Italian state funds remains below 7% to 6.56%.

In Spain too, a bond issue was expected and was relatively well. The rate of the ’10-year Spanish back to 5.15% this afternoon.

In recent days, “the many statements made in Europe seem to weaken the position of the euro”, commented this morning, the analysts Changes of Pictet & Cie this morning. “The market is stunned by news and information, sometimes comforting, sometimes disturbing, and the euro / dollar suffers”

Meanwhile, today, ‘the decision of the ECB will be the key event of the day, and as the impact of recent rate cuts has yet to be felt, the refinancing rate should be left unchanged this time’ , predicts a professional IG Markets.

“The rate (the ECB) should not be changed before the month of March,” predicts a consulting firm Northern Europe, who expects no further announcements on the side measures of liquidity. Traders, however, wonder if Mario Draghi will discuss “the stabilization of the economic environment and / or give clues about possible acquisitions of sovereign bonds.

Beyond the status quo expected, about the successor to Jean-Claude Trichet, Mario Draghi at its press conference at the beginning of the afternoon should be studied carefully, as some are hoping for signs of further rate cuts in the months to come.

In the meantime, take advantage of market rumors of a successful major award in Spain in which the country had managed to place about 10 billion euros of bonds: the yield on Spanish 10 years fell by 12 basis points to 5 , 20%.

It is in this context that investors are aware of the inflation figures in the two largest economies in the euro area: the whole of 2011 it stood at 2.3% in Germany and 2.5 % in France.

On the American side, is expected this afternoon in the U.S. the weekly jobless claims and retail sales in December, under the consensus to 375,000, and stocks of companies in November, which should move up 0.3%.

By 1700 GMT, the euro bought 1.3067 dollars against 1.2996 dollars around 2200 GMT Monday.

The single European currency also gained ground against the Japanese currency to 101.64 yen against 101.41 yen late Monday. Japan announced Tuesday its intention to boost its capacity for intervention in the foreign exchange market to reduce its currency. The dollar retreated against the yen at 77.78 yen against 78.02 yen Monday.

“A strong Spanish program was used to trigger a rebound” of the euro during the European exchanges, noted Elsa Lignos, an analyst at Royal Bank of Canada. The Spanish Treasury Tuesday raised 5.640 billion euros in vouchers at 3 and 6 months for its last bond issue of the year, at rates down sharply and beyond for the third straight time the government’s objective, with some relaxation on the market.

Another source of support for the single currency, the business climate in Germany has a new improved in December, companies are showing very optimistic for the first half of 2012 despite the worrying signs are multiplying that the European economy, according to results of the Ifo barometer published Tuesday.

The European currency was also helped by the announcement Monday of the countries in the euro area that they would provide 150 billion to the IMF in the form of bilateral loans to replenish its coffers, after a telephone conference of ministers Finance of the European Union (EU).

The announcement “shows that the progress has been made to strengthen the safety net of the monetary union and thus helped restore some morale (to traders), but (the loan) will not be enough to help the Spain and Italy, “if these two countries were to be in difficulty to borrow in the markets, commented Kathleen Brooks, an analyst with Forex.com.
Some analysts remained cautious, while the euro was struggling to go up lasting more than 1.31 euro.

A low point was reached this morning from 1.3166 was reached this morning.

Similarly, the European currency gained 0.26% against the pound at 0.8474, 0.12% to 102.85 against the yen and symbolically 0.05% to 1.2362 against the franc.

A North European trader this morning gave an update on the decisions and / or recent announcements of rating agencies. On the one hand, Standard & Poor’s “indicates that the notes of the debts of European countries are likely to be degraded again imminently. In addition, Fitch and Moody’s said yesterday that they saw an increased risk after the signing of the Europe Agreement on Friday. ”

He added that the case of France is particularly mentioned, and that the loss of its ‘AAA’ by the Hexagon would have “very negative implications for both Paris and for the EFSF whose rating also depends on that of France” .

In terms of sovereign rates at 10 years, that of Italy was stretched slightly to 6.66% this morning, when Spain was 5.80%, 3.30% in France and Germany by 2.06 %.

However, we learned this morning that the ZEW index of economic sentiment speakers from Germany, the first euro area economy, had emerged up 1.4 points to -53.8 this month, thus an end to nine months of consecutive decline.

“Financial experts seem to expect a slowdown in economic activity, but not a dive over the next six months, “commented the president of the ZEW, which sees this improvement possible effect of the decisions of the EU summit .

Some caution is likely to stay put, especially since ‘concerns about European debt will continue to dominate, since no one seems to really know the outcome of the case’, admitted this morning a trader IG Index.

Expected, this afternoon on the agenda on the American side statistics, retail sales in November (forecast: 0.6% Previous: +0.5%) and the status of stocks of companies. Later that evening, we expect the meeting of the Monetary Policy Committee of the Fed (FOMC).

Against the yen, the euro was down 0.41% to 103.6, when it yields 0.19% against the Swiss franc at 1.2365 and 0.13% to 0.8528 against the pound.

The Bank of England will also make known its position on interest rates just before the ECB. She had to keep them at 0.50%.

“A joint letter containing the proposals of Angela Merkel and Nicolas Sarkozy, including a base harmonization of corporate tax, a tax on financial transactions, coordination in the labor market and a convergence of policies to support growth, was sent to Mr. van Rompuy “remind traders of Pictet & Cie this morning.

The euro area has also received support from the U.S. Treasury Secretary yesterday, Timothy Geithner.

At the meeting of the ECB, in a little over an hour, CM-CIC and Aurel BGC expect a decline in short rates, currently at 1.25%, at least 25 basis points when Jyske Bank expects just 25 points, as traders of Pictet & Cie.

The ECB should also confirm that it will further relax interest rates and allocate unlimited liquidity to commercial banks. “That should be enough to close the gap in rates between the euro and the dollar,” said Jyske, for whom the dollar thus has a potential decline against the euro.

That said, the side of the bank in Frankfurt, “we do not expect returns on buybacks in the secondary market. The ECB should not close the door to future interventions but it is conditioned to the negotiations between European leaders, “said CM-CIC, agree on this point with many stakeholders as Barclays Bourse.

Regarding the EU summit that begins tonight with a dinner, according to Jyske, nothing important is to wait before the second day of the meeting, tomorrow, Friday. “It will not give too much importance to some announcements that will be performed today,” say traders.

Loaded on the side of Europe, the news looks thinner on the other side of the Atlantic, which will first be unveiled registrations weekly unemployment benefits. The consensus at this time of 395,000 “entries”, against 402,000 the previous week. Then, wholesale inventories should, in October, having increased by 0.3%, after falling 0.1% the previous month.

On this side, the market has high hopes in the European Council on December 9 in which announcements could be made stronger. This has also contributed to improved risk appetite and the rebound of the euro even if it remains limited compared to other currencies.

Despite possible changes to the European treaties, Germany reiterated its rejection of any idea of ​​Eurobonds, while the ECB is still refusing to monetize the debt of peripheral countries. However, the ECB seems more open to Other measures to support growth probably by lowering interest rates next week to 25bp to 1.0% and perhaps by injecting more liquidity.

We believe the ECB will lower its key interest rates more significantly to 0.50% in the coming months. As the European Council meeting of December 9 might be disappointing, the euro should resume its downtrend in the coming weeks. In this context, we reviewed our scenario on the EURUSD and look forward to maintaining a level of 1.25 in the first quarter of 2012.

The CHF has weakened these days deniers face repeated statements by members of the SNB for other support measures if growth were to falter as the government is considering negative interest rates to limit the appreciation of the CHF . Thus, the EURCHF is pressed over 1.23, but in the coming months, the downward pressure on the euro will draw the EURCHF to its central rate of 1.20.

Inally, the AUD and NZD currencies conveniently rebounded strongly against the improved risk appetite. However, risks remain significant correction of these currencies given that the uncertainties remain large European economies and that these countries are beginning to pƒtir the strength of their currency, which should encourage central banks to keep RBA and RBNZ speech very accommodating likely to affect their currency.

The bad news for trading keeps coming in from Europe where rates are changing in Italy over 7% and where the rating agencies increase warnings. Fitch has downgraded the debt of Portugal, while Standard and Poor’s did the same with the Belgian debt by Moody’s indicates that no State in the Euro zone was not immune to deterioration. Also, the Organization for Economic Cooperation and Development (OECD) estimated that Euroland came into mild recession, not excluding the bankruptcy of a country.

The prospects of support for Italy in the EU and the IMF and a stability plan nevertheless allowed the currency to avoid a new round of sales and distressed states to proceed with success in their respective auctions. Angela Merkel, however, always opposed to a greater intervention by the ECB or the creation of Euro-bonds, but the first two European economic powers prepare measures to strengthen fiscal discipline in the region. Finally, ahead of the summit of December 9, the Eurogroup meeting in Brussels has approved new measures to increase the firepower of the EFSF, but less ambitious than originally announced on October 27.

Technically, even though the Euro has slowed his fall, the deduction is explained more by the decline of the dollar rather than of the Euro, that was not engulfed in the wake of stock market indices at the beginning of the week. The Dollar Index has indeed encountered resistance to the approach of the Euro, but falls down sharply against most major currencies and we are sellers in the short term parity, always with the support USD at 1.3189 in sight.

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The trend is not much better against the yen (- 0.57% to 103.38), pound (- 0.47% to 0.8600) or the Swiss franc (- 0.30% to 1.2310 frank the euro).

Traders have actually learned this morning that the overall activity of the Eurozone had fallen back for the third consecutive month in November, according to Markit PMI survey Flash. Still below 50, indicating a contraction, the Composite Flash PMI overall activity in the Eurozone, however, has recovered to 47.2 against 46.5 in October.

Among manufacturers, production fell for the fourth consecutive month, the decline is the largest since June 2009. Among service providers, activity declined for the third consecutive month, despite a slight slowdown in the contraction compared with October.

Moreover, always in the euro area, the index of new orders in industry declined 6.4% in September 2011 compared to August 2011, according to Eurostat. For the month of August, the index was revised up by 1.4% instead of 1.9%.

This morning, the interest rate paid by the ‘Bund German and 10 years took over the 2% to 2.02%, when the French OAT pointing equivalent to 3.63%, a’ spread ‘(the difference between the two rates) stable but still high in the order of 160 basis points.