psaTrading
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The European indexes started the week trading high with the positive expectations for the ECB meeting next Thursday (22 Jan). These expectations should overlap to some risks hanging over the European markets since increase the odds of the adoption of a sovereign bonds buying program by the ECB. Although the program’s scale is still unknown, there were two indications that the ECB will act. The first was the assent by the European Court of Justice for the purchase of debt by the ECB under the OMT program (Outright Monetary Transactions). This assent is extended to a debt purchase program from the perspective of quantitative easing, thus rejecting the objections of the German Constitutional Court. The second clue was the abandonment by the Swiss National Bank (SNB) of the fixed exchange rate of the Swiss franc (CHF) against the Euro. This decision was taken considering that the ECB will adopt a quantitative easing program, which would make the SNB’s currency strategy unsustainable, in that it would be forced to buy very large amounts of Euros. However, over the horizon hover some threats.
