Big banks predict Eurozone rate cut as Draghi runs out of options
A rate cut is now a very real possibility for the Eurozone.You know the drill. Rate cut=weaker euro/stronger dollar=lower precious metals.
The drop in the consumer price index to 0.7 per cent in October means inflation in the euro area is rising at the slowest pace in four years, well below the European Central Bank's (ECB) target of just under two per cent and signalling the ninth month in a row that the rate has been less than the ECB's ceiling.
Available options for president Mario Draghi to tackle inflation may be diminishing, and an interest rate cut from 0.50 per cent to 0.25 per cent is now expected to be on the cards at the bank's 7 November policy meeting.
UBS, Bank of America Merrill Lynch and RBS are all predicting rate cuts next week, with Societe Generale, BNP Paribas and JPMorgan seeing cuts in December....MORE
And from Short Side of Long:
Gold, Silver & US Dollar
Chart 1: Precious metals have reversed yet again at a major resistance
Source: FinViz (edited by Short Side of Long)
In the post a few days ago I said that "I wasn't yet convinced PMs have truly bottomed, so just as easily we could see a downside break" just as the prices were touching resistance on both Gold and Silver. The reason I hold this short term view is for a variety of reasons.The situation in Europe is serious enough that we had three posts in an hour yesterday:
First, the the tape is not behaving as if we are in an uptrend, but rather still in a downtrend. Second, Gold is still officially in a downtrend according to all simple technical rules....MORE
UPDATED--Flash estimate: Euro area annual inflation down to 0.7 %EUR/USD 1.3503 down 0.60%
UPDATED--"Spectre of destructive deflation looms over eurozone: analysts"
FT Editorial: "Europe’s flirtation with deflation"
Gold $1314.60 down 0.69%.
