Economics
Should you buy the euro on news of joint issuance of EU debt?
Monday was a quiet day in the currency market. Because of Columbus Day in the United States, banks were closed, so the foreign exchange market did not…
Monday was a quiet day in the currency market. Because of Columbus Day in the United States, banks were closed, so the foreign exchange market did not move much.
But during the US session, the euro pairs spiked higher briefly. They all reacted to the news that Germany, the biggest European economy, will support joint issuance of EU debt to tackle the European energy crisis.
So is it now a good time to buy the common currency?
The big news out of Germany led to tighter spreads
The common currency reacted to the news, but the move quickly faded. However, the bond market was much more receptible and properly understood the announcement’s significance.
As a result, the spread between the Italian and German bonds tightened, which is typically good news for the euro. Wider spreads mean a higher borrowing cost, and tighter spreads mean the opposite.
Europe faces a harsh winter as the energy crisis triggered by Russia’s invasion of Ukraine affects everyone. Moreover, inflation seems out of control as the European Central Bank lags behind other central banks in the race to tighten financial conditions.
Therefore, such news might be just the trigger for an upside move for the euro pairs. The EUR/USD exchange rate, in particular, was hit hard by the war in Europe and the strength of the US dollar.
After recovering to parity last week, it was aggressively sold before and after the Non-Farm Payrolls report last Friday. However, yesterday’s news is a big deal and should support the euro if spreads continue to tighten.
The post Should you buy the euro on news of joint issuance of EU debt? appeared first on Invezz.
Argentina Is One of the Most Regulated Countries in the World
In the coming days and weeks, we can expect further, far‐reaching reform proposals that will go through the Argentine congress.
Crypto, Crude, & Crap Stocks Rally As Yield Curve Steepens, Rate-Cut Hopes Soar
Crypto, Crude, & Crap Stocks Rally As Yield Curve Steepens, Rate-Cut Hopes Soar
A weird week of macro data – strong jobless claims but…
Fed Pivot: A Blend of Confidence and Folly
Fed Pivot: Charting a New Course in Economic Strategy Dec 22, 2023 Introduction In the dynamic world of economics, the Federal Reserve, the central bank…
