The weaker growth has given strong ammunition to those who don’t want to set any deadline for monetary easing, as suggested by Federal Reserve and Chairman Ben Bernanke two weeks ago. Their statements led to steep falls in global stock markets and eradicated earlier profit. The influential Chairman of the NewYork stock exchange, William Dudley, said on Thursday that attention should be paid to effects of monetary easing and not on artificial deadlines.
The weaker data, and Dudley’s statement, gave the stock market a strong injection. The rally seen over the last two days continued. Dow Jones again reached the psychological important 15 000 level and traded up 0.89 %. Nasdag equally added 0.94 %. European bourses had another good day after EU finance ministers urged to fight youth unemployment, and took new important steps towards a European bank union. The ministers simultaneously took criticism on the handling of the Cyprus bank crisis and haircutting of private accounts.
These developments had an immediate impact on the currency market, which is deemed to continue to be volatile. EUR/USD recovered from 1.2999 and traded at 1.3032. It needs a clear and more thorough brake to avoid being stuck in bearish territory. The belief in continued easing also hit the other safe haven currency, JPY. British Pound Sterling, GBP, fell dramatically to 1.52. This is the lowest level seen in 3 weeks. The weaker pound came as a reaction to an adjustment of British economic growth in the first quarter. Growth is much lower than expected.
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