ECB cuts deposit rates

This topic contains 4 replies, has 1 voice, and was last updated by  philip 1 year, 10 months ago.

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  • #4828 Reply

    jack

    Hi all,
    i was just wondering, since i am new to binary options how you all think that the unprecedented decision of the ECB to cut deposit rates and especially the overnight rate to -0.10 for the first time ever, might affect the price of the Euro, the Dollar, gold etc?

    #4835 Reply

    andy

    well jack,
    if i know anything about anything i would suppose that the EUR will fall in the aftermath of this, especially vs the dollar..and i guess this was the logic behind their decision since they felt that the EUR was too strong to be competitive..
    as for gold, this is an interesting case….those closely watching the markets will tell you that gold usually moves in the same direction as the EUR. this is mostly valid and especially useful if you are into binary options trading. however, this time gold has gone up, moving in the opposite direction to the EUR. this is only natural because another point to bear in mind is that low interest rates and a looser monetary policy tend to favour gold for obvious reasons.
    overall, you are right this was a historic decision and it will be interesting to see if the ECB stimulus measures do manage to help the EU economy. if i could venture a guess i would say that for the countries of the south, which are facing most problems, it just wont be enough….
    hope this helps

    #4837 Reply

    mary

    andy, you were right about the initial reaction of the EUR yesterday but it seems to be recoving today. isn’t it too soon? what do you think? is the market becoming more unpredictable due to such extra-ordinary monetary policy measures?

    #4839 Reply

    amanda

    Hi all,
    another point worth highlighting is the reaction of the Sterling which has strengthened against the Euro to its highest point since December 2012 following the interest rate adjustments by the European Central Bank. i think this is another opportunity to be had.

    #4851 Reply

    philip

    I stumbled across this post and found it very interesting. Sorry to spoil it for you all but I don’t think that this decision by the ECB was guided by purely economic considerations but rather it was dictated by political necessity. I am almost certain that Draghi and his fellows on the board of the ECB who have been dovish for so long did not simply wake up one morning and became hawks. It is rather that their decisions were dictated by the EU’s political elite, who were alarmed by the results of the recent EP election. Not only due to the high abstention rate but mostly due to the increase in power of the various extremists and anti-EU voices, such as the National Front in France, the Alternatives in Germany and the UK Independence Party. So yes maybe the decisions will impact the various financial markets and values of certain tradable assets in the short term, but I am not at all confident they will improve the lives of people, especially in the Southern EU countries who have been hit badly by the crisis.

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