"ECB raises interest rates to 4.25%"

http://www.ft.com/cms/s/0/be778b1a-48e8-11dd-9a5f-000077b07658.html?nclick_check=1

" ECB raises interest rates to 4.25%

The European Central Bank raised interest rates in the eurozone for the first time in more than a year on Thursday as it stepped up efforts to control mounting inflation pressures.

As expected, the ECB lifted its main interest rate by a quarter percentage point to 4.25 per cent – the first rise in eurozone borrowing costs since June last year.

... ... ...

The euro was little changed ahead of Mr Trichet’s press conference at $1.5876 against the dollar as investors also awaited a key employment report from the US."

 

yeah, rates up in Europe, unemployment surges in US and the dollar goes up 200 pips. Interesting. Libor is rougly 2% different between USD and EUR.

No wonder the dollar goes up. -))

Any suggestions?


'Should have added noone seems to be wanting EUR. Strange. Trichet should increase to 6%. Shouldn't he?
We want a strong dollar, right?

 

25 BP is really nothing. It doesn't really make much difference in this environment. It was more of a symbolic gesture than a truly market affecting move. Europe is trying to lead the US federal reserve. Which won't happen.

The fed will do what it wants to save the US economy even if it puts the rest of the world into a recession. Right now, the dovish monetary policy is exporting our slowdown to the rest of the world through inflation. People are losing their buying power in every country. Europe even with the strong Euro is also seeing rising prices.

The US is still the financial center of the world. The world cannot go on without US growth. I think other countries are finally realizing this and soon will have to put the brakes on inflation and will drive themselves into a slowdown. Right as the there's a worldwide recession, the US will start recovering and all the money will come right back into the dollar. This happens every 20 years or so.

 

Timing is everything.
All the Euro buyers are on vacation, but where are the dollar buyers?

If your theory is right - then why noone wants the USD?

 

I'm talking yearly cycles. It's not going to change overnight. The US still needs to go through some more pain.

 

179 PIPS was not good enough for you?

 

well, a year from now is pretty distant future for a FOREX trader.

I also have a good prognosis.
USD will go up and down or vice versa.
1 month timeframe.

I have no clue who would buy USD but it will go up for sure

 

You did expect 0.25% raise today - didn't you?
You did expect lousy payroll number - right?

It was easy to figure Trichet won't raise further. Wasn't it?

So why did the market move 200 pips on these news?

 

Expect the unexpected in the markets my friend...I traded ZB both long and short today and did just fine!

I am sorry you lost money, better luck next week.

el surdo

 

Well, yes, expect the unexpected.
I did not lose yet. I waited out the crazines. I went long EUR at 1.5693
I am slightly underwater.