User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Friday March 27, 2009 - 15:31:18 GMT
BHF-Bank -

Share This Story:
| | Email

FX Briefing - ECB security purchases: the genie is out of the bottle

FX Briefing 27 March 2009

·        Highlights

·        China is striving to influence the global financial system

·        ECB vice-president Papademos describes additional measures ECB could take

·        ECB is set to cut the refi rate by 50 basis points to 1%


ECB security purchases: the genie is out of the bottle

This week, forex markets were driven primarily by the sustained recovery in equity markets and the subsequent increase in risk appetite. The US private-public purchasing programme for toxic assets and loans could also have played a part. This development boosted emerging market currencies as well as “commodity” currencies such as the Canadian and the Australian dollar. But currencies such as the Korean won and the Swedish krona, which had previously been considered particularly at risk, also benefited. After last week’s rebound, EUR-USD remained relatively flat. Mid-week, rates had tumbled from around 1.36/37 at the beginning of the week to below 1.35, but recovered again to about 1.3550 towards the end of the week. The yen, which had also firmed against the dollar the previous week, relinquished its gains. USD-JPY rose from about 95 to 98. The yen has now depreciated significantly again versus the euro. In January, EURJPY was about 115, but it is now back to around

133 again.


China wants global monetary system reform

The Chinese central bank’s call for a new international monetary system caused quite a stir this week. Zhou Xiaochuan, governor of the People’s Bank of China, suggested increasing the use of International Monetary Fund Special Drawing Rights (a unit of account created by the IMF based on a basket of key international currencies) as a new global reserve currency.


China’s main argument is that a reserve currency country (not specifically named, but obviously the US) is constantly confronted with the dilemma of trying to achieve its domestic monetary policy goals while at the same time ensuring the stability of the reserve currency. China’s suggestion is more food for thought rather than the complete draft of a new system. It is by no means certain whether a currency based on a basket of currencies like the Special Drawing Rights could in fact take over the role of an international reserve currency. And it would be even harder to create an autonomous supranational currency.


China is probably aiming at achieving two immediate objectives: first, in the run-up to the G20 summit at the beginning of April, it probably wants to assert its right to have a say in international monetary questions. The International Monetary Fund is to be given additional responsibilities, and requires fresh capital. China is willing to pay additional capital into the Fund in return for having a say. An increase and reform of IMF quota on the basis of economic performance would lead to a massive shift in the distribution of power in the Fund to the benefit of the big emerging market nations like China, India, Russia and Brazil, and to the detriment of the major industrialized countries, particularly the US.


Second, China’s proposal is a warning to the US not to jeopardize the value of other countries’ currency reserves. A few weeks ago, Chinese Premier Wen Jiabao had already asked the US government to guarantee the safety of Chinese investments in the US. China is in a dilemma, however: its monetary authorities’ dollar holdings are now so vast, that it could not move out of dollar assets without suffering a loss.


ECB’s monetary policy options

Another notable event was a speech given by ECB vice-president Lucas Papademos on Thursday in Brussels. It is striking that the assessment of macroeconomic risks has worsened again compared, for example, to that in the governing council’s statement at the beginning of March. As far as we know, Mr Papademos is the first ECB representative to admit to downward risks to price stability, credit supply constraints, and the danger of an adverse feedback loop between the real economy and the financial sector. Most importantly, however, Mr Papademos hints that the ECB is intending to implement further measures in addition to interest rate cuts. According to his remarks, the ECB could, firstly, extend the maturity of refinancing operations. Up to now, this was a maximum of 6 months. Secondly, Mr Papademos sees a possibility of purchasing private debt securities in the secondary market to improve liquidity in this market segment and reduce the cost of funding of the real economy.


The ECB governing council is not likely to present a hard and fast plan to purchase private securities next Thursday. However, the fact that the vice-president of the ECB, who tends to be rather tight-lipped as regards monetary policy, starts talking about possible quantitative measures shortly before a council meeting, must be more than a coincidence. Now that this genie is out of the bottle, it will be difficult to get it back in again. We therefore consider it feasible that the governing council will next Thursday at least admit that it is considering such measures. Furthermore, we expect the ECB to lower the refinancing  rate by a further 50 basis points to 1.0%.


This measure would be most effective if the deposit rate, which is currently serving as a basis for the overnight rate, were to be cut from 0.50% to zero at the same time. In our view, this is possible and would make sense. However, market  participants’ expectations diverge on this point.

Stephan Rieke +49 69 718-4114


Economics Department

+49 69 718-3642

[email protected]

Foreign Exchange Trading

[email protected]

Jörg Isselmann

+49 69 718-2695

Matthias Grabbe / Klaus Näfken

+49 69 718-2688


<i>This report has been prepared by BHF-BANK Aktiengesellschaft on behalf of itself and its affiliated companies (together "BHF-BANK Group") solely for the information of its clients. The information and opinions in this document are based on sources believed to be reliable and acting in good faith, but no representation or warranty, express or implied, is made by any member of the BHF-BANK Group as to their accuracy, completeness or correctness. Opinions and recommendations are given in good faith but without legal responsibility and are subject to change without notice. The information does not constitute advice or personal recommendation, for which the duty of suitability would be owed, but may facilitate your own investment decision. Moreover, you should seek your own advice as to the suitability of an investment matter mentioned herein. Investors are reminded that the price of securities and the income from them can go down as well as up and that the past performance of an investment or a market is not necessarily indicative for future results. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete, and this document is not, and should not be construed as, an offer to sell or solicitation of any offer to buy the securities mentioned in it. BHF-BANK Group and its officers and employees may have a long or short position or engage in transactions in any of the securities mentioned in this document, or in any related securities. This publication must not be distributed in the United States.

© 2007 BHF-BANK Aktiengesellschaft

All rights reserved. Please mention source when quoting from it.



Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 10 Sep 2018
AA 08:30 GB- GDP, Trade, Output
Tue 11 Sep 2018
AA 08:30 GB- Employment Decision
A 09:00 DE- ZEW Survey
Wed 12 Sep 2018
A 12:30 US- PPI
A 14:30 US- EIA Crude
A 18:00 US- Beige Book
Thu 13 Sep 2018
A 1:30 AU- Employment
AA 11:00 GB- Bank of England Decision
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
AA 12:30 US- CPI
Fri 14 Sep 2018
A 08:30 GB- GDP
AA 12:30 US- Retail Sales
A 13:15 US- Industrial Production
AA 14:00 US- prelim University of Michigan

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105