Now that German courts have given the greenlight the ESM, we shall take a look at how the market has reacted.
EUR/USD M15
DAX30 M15
XAU/USD M15
BCO/USD M15
Key takeaways:
Prices have rallied predictably on the back of ESM ratification. However a few questions remain
- Will Italy and Spain apply for bailout funds under ESM?
- Will the amount in ESM be enough to save Euro-zone?
- Will there be another need for parliamentary approval since German Courts has ruled that German liability to the ESM must not exceed €190bn without asking the Bundestag for approval.
- Will German courts consider the Outright Monetary Transaction (OMT) a violation of German sovereignty?
Using the last big EU/ECB news as reference (OMT announcement), we could potentially be see inactivity while the European traders digest the news and weigh all the unanswered questions. Perhaps we may only see a strong rally/sell off during US market opening.
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