Forex Market Issues and Risks

Forex Fundamental Analysis Reports Written by AC-Markets Aug 14 07 05:18 GMT

OTEuro falls after ECB cash injection

News and Events:The Euro fell to a one-month low against the Dollar on Monday after the European Central Bank pumped cash into the banking system for a third straight day to soothe a market rattled by US sub-prime mortgage market problems. The Euro came under pressure as investors began to lower their expectations for a rate rise in September from the ECB in the face of turbulent credit markets. Analysts said 'the market has been expecting the ECB to hike rates, but if all these injections lead the market believe that they won't hike it, and this credit contagion gets worse, that could definitely hurt the Euro'. The ECB injected 47.67 billion euros ($64.93 billion) into euro-zone money markets Monday in a one-day tender to replace Friday's special three-day tender for 61.05 billion euros. The moves by ECB helped ease short term borrowing costs that jumped higher last week after redemptions were frozen on several European banks' funds associated with the US sub-prime mortgage sector, including three at France's largest bank, BNP Paribas. ....Read more........