ECB vice president Papademos says there have been recent signs that the economy is stabilizing. It will take some time before our economies fully recover and grow at a robust rate, he says. He says that European banks have raised more new capital than they have taken write-downs.
That last comment may well be true, but it begs the question haves European banks taken sufficient write-downs. Most would say they have not.
The timing of the emergence of “green shoots” in Europe also calls into question whether the ECB will “pull its punches” when it meets on Thursday. A move ago, the sprouts had barely broken the surface, giving the bank the room to suggest “non-standard measures” would be deployed. One has to wonder if if the ECB will take a go-slow approach this week, taking only tiny steps toward QE, preferring to wait for more data before going “all in”. Presumably, that would be a euro plus.
1.3255/60 resistance is eyed on rebounds near-term. We trade now at 1.3238.
