FX.co ★ Fundamental Analysis for February 29, 2012

After the ECB injected 489 billion euro into the banks on the 21st of December, the agency is preparing to perform a similar action on Wednesday, a value similar to or slightly lower.
This type of measures seek to give liquidity to financial market which confidence in the ECB has been lost for various reasons. In fact, although the agreement to save Greece from default insurance is already signed and agreed, European markets have reacted positively.
The amount to be auctioned today at a rate of 1%, is extremely low, given a sample of the mood of the markets to an action of this nature, which is very similar to the QE by the Feds implemented several times in similar circumstances/
The LTRO operation (long term refinancing operation), can generate a strong impact on the euro, although truly we need to wait until we see what kind of effect it may cause.
In general, such an operation should generate confidence, or at least restore it. But ... if the numbers are not expected, the effect will be opposite, and the euro could misbalance again.
However, an operation has long term consequences. In a situation like the present, no money is available, and so I suffered through the Fed in late 2008 and early 2009. Only several such interventions Wall Street came to believe, and actions to grow.
It is somewhat different in Europe. European economic officials try to show complacent, allowing up to what is not allowed until days ago, short operations.
But now they know that is not with grand speeches or advertisements as it goes ahead, but money is not missing, but has been lost by the falling value of paper, properties, businesses, and product of the crisis.
The markets got used to be flooded with liquidity and the current weakness of the dollar is a reflection of that. Those who believe that far exceeds the 1.30 euro to its credit, has a skewed view, attributing to one country, Germany, a boom in Europe is only there. The euro simply reflects dollars left over the world, the same ones used by the U.S. to finance its huge trade deficit and current account.
If Europe decides to implement similar policy, the single currency will soon fall very strong. If what is left in a market is not the dollar but the euro, will see that this does not enjoy the same prestige as that, or is sought as refuge from the hard times.
However, a measure such as that carried out by the ECB today is largely positive and necessary to try to balance the current situation and begin to stimulate the European economy.
Across the Atlantic, we expect for the revised fourth quarter GDP, 2011 (8:30 EST), with a 2.8% growth expected. Measurement is the second of three, and should have a greater impact on the market.
Also known, at 9:45, Chicago PMI, will be presented at 10:00 Ben Bernanke, Fed Chairman on the Finance Committee of Congress, and at 10:30 weekly oil inventories will be published.