The analysts at Lazard Capital Markets assume the ECB is going to continue its LTRO(Long Term Refinancing Operation). The peripheral eurozone economies have been successfully placing their bonds since the ECB started the LTRO. The first transaction (489B euro) was made on Dec 21st 2011. At this point, the European market is short of funds. That is why the Spanish and Italian bond yields are growing. The next round of the LTRO is expected to take place in the near future. According to Art Hogan, chief strategist at Lazard Capital Markets, the ECB is expected to be purchasing bonds as well as the risky eurozone countries will need more time for structural reforms.
The LTRO implies expanding the money supply, which has a positive impact on stocks. The major difference between LTRO and QE is that the former allows the banking system to get the money almost instantly while the later implies gradual bond purchases with a specific period.
According to , EURUSD stays flattish. The price is fluctuating within the 1,3057-1,3165 range. A break below the MF pivot 1,3060, with a bearish FZR below it, will trigger a downswing. Alternatively, a break and consolidation above 1,3148 will reverse the mid-term downtrend.
