Saxo Bank Comments On Eurozone Sitation Ahead Of EU Leaders Summit
Released on: December 02, 2011, 1:41 pm
Author: Saxo Bank
Saxo Bank has released a new macro view video with Steen
Jakobsen, Chief Economist, commenting on the situation for the Eurozone
ahead of the EU leaders' summit and in light of the major global
central banks' intervention to boost liquidity. The concerted central
bank action has effectively resulted in the US printing money for
Europe seeing as the European Central Bank will not, says Steen, adding
that it’s like flying in a jet with one engine only - hardly a safe
The surprising joint intervention by the world's largest central banks to make it
cheaper for financial institutions outside America to borrow dollars has had a
positive effect on risk sentiment, but is not expected to last long. For an extended
rally or to just sustain gains something more needs to be put on the table, like
better fundamentals, plus structural changes and real commitments to toing the line
in Eurozone nations, says Steen. The reason being that the severe solvency issues in
Europe and deep rooted growth problems are still very much plaguing outlooks.
One could argue that with the central banks having joined forces the pressure is now
more so on European politicians to implement lasting austerity and commit to
cleaning up their backyards and follow standard rules. The question is whether EU
leaders will be able to set things straight once and for all when they meet for the
seventeenth time to solve the issues. Steen remains doubtful.
In the meantime, the central bank action has resulted in the cost of emergency
dollar funding being cheaper for European banks than US banks. Therefore there is
increased expectation now that the Federal Reserve will lower its discount rate by
at least 25 basis points before the new dollar swap rate kicks in on December 5. A
deeper cut is also possible, he says but that would mean the Federal Reserve is
virtually letting go and committing to printing money forever.
Steen also commented on the global macro situation, in particular China, following
the Reserve Requirement Ratio cut amid a slowing growth scenario and in terms of
timing in a global context. Meanwhile US data continues to please for now at least
but he warns that the better numbers may be petering out.
The full video can be viewed at
About Saxo Bank
Saxo Bank is a leading online trading and investment specialist, assisting clients in forex trading, CFDs, Stocks, Futures, Options and other derivatives The three specialised and fully integrated trading platforms; the browser-based SaxoWebTrader, the downloadable SaxoTrader and the SaxoMobileTrader application are available in over 20 languages. Saxo Asset Management accommodates high-net worth private clients and institutional investors. In 2011 Saxo Bank continued the diversification of its business and launched Saxo Privatbank. The Saxo Bank Group is headquartered in Copenhagen with offices throughout Europe, Asia, Middle East, Latin America and Australia.
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