Dow 30 chart forexpros
The solution devised by Mario Draghi and company at the time was to raise the limit regarding the amount of Greek T-Bills the Bank of Greece could accept as collateral for loans, essentially allowing the Greeks to issue worthless T-Bills in exchange for euros which would then promptly be paid back to the ECB in the form of a bond payment. This is of course the very definition of monetary financing. The ECB simply allowed Greece to issue more T-Bills for fresh euros and in the absence of a quick agreement in Brussels on Monday, this tactic will likely be employed again so Greece can make its debt payment.
Next week, Greece will have to refinance 5 billion in T-bills, and that's likely to be done again through emergency lending assistance. How much longer is the ECB going to tolerate that sort of behavior? And also, could you please explain to me why that's not a form of monetary financing?
We don't consider emergency lending assistance to be monetary financing. It's considered amongst our instruments. It is abundantly clear at this juncture that the ECB is propping up governments with its policies and there really isn't much attempt to hide it anymore. This makes it especially absurd that the central bank should equate a restructuring of its Greek debt with monetary financing while at the same time printing euros and handing them to Greece so Athens can repay its bonds.
There are two takeaways here. First, the ECB is engaging in monetary financing when it utilizes emergency liquidity assistance to help Greece pay-off its bonds and the central bank is also running a circular funding scheme in the process as the money Greece gets from ELA goes right back to the ECB for bond payments. In addition stock markets around the world will rise in value.
Currency traders and speculators will flee higher yielding currencies and the USD and Yen will typically appreciate in value. In this scenario stock markets around the world will fall in value. Traditionally when feelings became negative about the economy and markets, a Risk-Off environment, investors would turn to gold as a safe haven.
More recently gold has been acting like a Risk-On asset. Through stimulus and money printing, central banks around the world are trying to create, what feels like, a permanent Risk-On environment. All markets are interrelated and go through periods of time when they are highly co-related. To determine whether the market is going to be up or down, the first thing I look at is the strength of the US dollar first thing every morning.
The US dollar the chart above. More than any chart this chart shows the relationship between currencies and stock markets. In , when stock markets around the world were taking a nose dive the Aussie dollar was taking a nose dive too.
Investors fled all asset classes and ironically moved to the relative safety of the USD. The Australian dollar bottomed months before the market bottomed in In deflationary times cash is king. Cash is required to pay for bills. At this moment in time, the USD also happens to be the reserve currency of the world. Commodities like oil are paid for in US dollars.
If you look at charts of all currencies from that period of time, except for perhaps the Yen, all currencies fell in value against the USD. Where are we now? As you may well be aware there are also a lot of problems in Europe. With all the problems in Europe, I sometimes question why the Euro has not sold off, by sold off I mean crushed?
Volume reflects consolidated markets.
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FOREX DAILY TRADING VOLUME 2022 OLYMPICS
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