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Euro is mixed after the ECB is warning of a trade war

2019-05-29 12:02 pm | Resource: News | No Views : 89

Euro is mixed after the ECB's warning of a trade war

Euro  was mixed against major currencies in Wednesday's trading as the European Central Bank's Vice President warned that the war on trade was on the European economy.

Vice President of the European Central Bank: warns of the impact of the trade war on Europe

A comprehensive trade war between the United States and China could further affect the euro zone's economic slowdown, Luis de Guindos said. ECB Vice President for CNBC said on Wednesday that the escalation would be "very damaging" and reiterated that it could increase market volatility and hurt the real economy "very quickly." He confirmed that it is not from the forest yet.

However, the policy maker expressed his satisfaction with economic growth and said he was expected to accelerate in the second half of the year on an annual basis. He said the ECB would announce the pricing of long-term refinancing plans next week at its regular meeting.

Low profitability affects stock valuations for banks in the euro area, where higher interest rate makers have clearly indicated that they are below book values. He referred to excess capacity and strong costs as structural issues and suggested that consolidation in the sector would enhance efficiency. Regarding Italy's dispute with the European Union over spending, De Guindos stressed the need for the country to respect financial rules, but referred to the current account surplus as a sign of competitiveness.

Vice President of the European Central Bank: Economic downturn may stimulate market volatility

The European Central Bank (ECB) on Wednesday warned companies and heavily indebted countries of "continuing downside risks" to economic expansion and called for measures to support balance sheets. Vice President Luis de Guindos said that if there was a downturn, financial stability would be in jeopardy as he published his semi-annual financial stability review report. The lack of structural reform has been cited as a key factor behind the Bank's low profitability prospects. The document highlights a potential increase in volatility in the event of such risks, including "escalating trade tensions".

Policymakers said the secured loan market is at corporate profit as it widened dramatically. Governments should take into account the potential increase in financing costs, to debt sustainability and fiscal deficits, they added. Lenders in the euro area still have strong capital adequacy, but the "big share" does not see up to 8% to 10% of returns, which investors demand at the discretion of price makers.

The ECB said: "There are signs that more funds are increasing their leverage and exposure to high-yielding assets with high credit risk ratios in a proportionate manner." Sudden re-pricing of financial assets could lead to large outflows and may lead to asset- . .


EUR trades against major currencies
 
  • The Euro was trading lower at 121.95 against the Yen.
  • EURCHF dropped to 1.11221, shedding 0.22%.
  • The euro rose against the British pound to 0.8828, gaining 0.07%.
  • The euro fell to 1.1155 against the dollar at around 12:02 CET.


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Best Opportunities, Vision and Technical Analysis for the USD/JPY pair 17 April 2019

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