Pressures are increasing on the European Central Bank where two banks had started with their quantitative easing methods, where the Bank of England took the first step then the Federal Reserve had decided last night to extend their balance sheet along with the purchase of long-term debt to revive lending.
Since the beginning of the year, Trichet said on various occasions that the European Central Bank is studying all options in order to revive back lending but any immediate actions will not take place because until now because no solid proof is found that the euro area are in need for this method.
However dear reader everything is expected the endless deterioration in the economy and continuous contractions that dragged consumer prices down will open the door for all other instruments to be used.
After what the Federal Reserve announced the US dollar weakened heavily against majors, giving the chance for the Euro to incline to the highest in six week, where is currently trading at 1.3661.
If we really want to arrange the economies on the level of exposure and failure, we put the United States on the top level, then followed by United Kingdom and the third would be the Euro area. The sixteen economies had faced severe contractions in their growth levels but they managed to hold on the highest benchmark rates, which gives them a competitive advantage between others.
They still have a space to maneuver, but the question is whether Trichet, the ECB chairman, will consider more reductions at the time being or not? Thinking about it and studying all the moves previously taken we can say that rates will stay at the current levels in the upcoming periods until the central bank see whether the situation would improve or not.
On the other hand, our calendar lacked any major fundamentals today, where the Euro and the European indices got bolstered by the ongoing weakness of the US dollar and Federal Reserve decisions last night.
Dow Jones euro stoxx added 2.42% or 48.92 points reaching to 2068.11 levels, UK FTSE 100 rose 2.05% reaching to 3882.18 levels, the French CAC 40 added 1.66% reaching to 2806.51 levels and the German DAX gained 2.52% reaching to 4096.92 levels.