Archived IMT (2010.05.06)

ECBs PRESS CONFERENCE DOES ANOTHER Business-As-usual, announcing no new policy measures in the midst of Sundays decision to suspend the minimum credit rating requirement. US & European equities may run the risk of extending fresh losses as the worlds second most important central bank avoids adding any sort of policy stimulus. Todays policy inaction highlights the ECBs stance that sovereign challenges are to be solved by their respective nations (Weber, Stark). It is easier for a central bank to talk down a soaring currency than to stabilize a plummeting currency. As we have seen in 2004 and 2006, JC was able to talk down the euro by warning against brutal moves in the currency. But any attempt to boost a falling currency would trigger a short-term boost before renewed losses. Todays $1.2692 breraks below the 5-year trend line support, leading to next target at $1.2610, followed by $1.2450. Given the increasing pace of the euro selling and the fact that the 1999 high-to-trough decline amounted to a 16% decline, a similar magnitude from the years $1.4582 high would imply a low of $1.2250. + USD INDEX +3.5% this week, its biggest weekly gain since October 2008.