http://www.fxstreet.com/fundamental/analysis-reports/market-sense/http://www.fxstreet.com/fundamental/http://mediaserver.fxstreet.com/images/fxstreet-provider-logo1-en.gif7http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-22.htmlSpeeches by Bernanke and Trichet at the ECB’s Central Banking Conference today grabbed most of the attention, but developments on the eurozone’ periphery seem of far greater import. Most importantly, the fact that the EU is stonewalling IMF proposals to extend the duration of loans extended to Greece is troubling. It is becoming obvious that unless repayment obligations are smoothed more evenly, Greece will not be able to make it even if it meets all the program targets. Refusing to considerMon, 22 Nov 2010 11:07:48 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-12.htmlThe Eurozone’s credibility deficit is getting larger by the day. The most recent antics on the Sovereign Debt Restructuring Mechanism are a breath-taking mixture of suicidal irresponsibility and farcical incoherence, and risk inflicting lasting damage to the recovery prospects of the most troubled peripheral countries and to the credibility of the eurozone’s economic governance framework. Germany had seemed determined to have agreement on a SDRM. But now from Soul, EU finance ministers tell usFri, 12 Nov 2010 18:19:57 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-04.htmlToday, the irresistible force of the Fed’s QE2 met the immovable object of an ECB firm in its convictions. Artfully avoiding any direct criticism of the Fed, Trichet clearly indicated that the ECB will proceed in full independence, its exit strategy guided by the ongoing economic recovery and financial markets normalization. Where the FOMC yesterday betrayed an irrational impatience with the pace of the recovery, the ECB today reaffirmed its cautious but sanguine view, noting that credit to theThu, 04 Nov 2010 18:24:49 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-11-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-29.htmlFed Governor Bernanke seems set to announce a new wave of quantitative easing next week, a move that has polarized opinions within and outside the FOMC and raised both hopes and fears to new highs. Some hope QE2 will turn liquidity into spending; others, like Kansas Fed President Hoenig, see is as “a bargain with the devil”. Savior or Mephistopheles, Bernanke seems ready for the gamble. He will likely find that money can’t buy you growth, at least not this time. The obstacle to a fasterFri, 29 Oct 2010 08:43:34 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-22.htmlThe brief golden age of international cooperation is over, as underscored by the G20 meeting underway in Korea and the discussions on reforms of the EU’s economic governance. European leaders seem yet again unable to agree on sufficiently ambitious reforms to match the scale of the challenges facing them; and G20 finance ministers and central bank heads will at best agree on the rules of engagement for the brewing currency wars. The generally accepted explanation for this breakdown inFri, 22 Oct 2010 12:46:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-12.htmlPerhaps the breakdown in international policy coordination at the IMF meetings over the weekend is a good sign. After all, global policymakers have so far been able to bridge the differences and present a united front only when faced with financial or economic calamity, so their failure to agree this time might signal that the risks are no longer as dramatic. On the other hand, failure to keep up the momentum on international cooperation casts doubts on policymakers’ ability to stay the courseTue, 12 Oct 2010 05:04:18 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-08.htmlToday’s ECB press conference was an anticlimax compared to the fireworks in sovereign bond markets and the excited talk of global currency wars, but this is exactly what the ECB intended: it was a classic example of its “steady hand” approach. With the Fed leaning towards QE2, the BOJ intervening to weaken the yen, and the IMF sounding the alarm on currency wars, Mr. Trichet pulled off a difficult balancing act: he gave no indication that the ECB is being swayed by this renewed policy easingFri, 08 Oct 2010 07:27:50 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-10-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-09-28.htmlWhile the underlying macro picture in the eurozone looks increasingly resilient and reassuring, the risk of accidents in financial and sovereign debt markets remains uncomfortably high, with Ireland and Portugal in the limelight. Spreads are set to remain high and volatile in the coming weeks, and much will depend on the actions taken by the two governments, by the result of the ECB’s liquidity auctions, and by progress in the discussions for reform of the eurozone’s governance. The risks andTue, 28 Sep 2010 17:24:08 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-09-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-09-02.htmlToday’s press conference signals no change in the ECB’s stance, as the central bank scales back liquidity support at a barely perceptible pace, just enough to signal the direction of an excruciatingly slow normalization process. Overall, the ECB feels confident that a sustainable recovery is underway, both in Europe and in the global economy, but harbors no illusions as to its strength. The ECB is not losing sleep over the risk of a double-dip recession, but rather over the persistent fragilityThu, 02 Sep 2010 18:23:14 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-09-02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-08-05.htmlWith fingers crossed and a prudent attitude, Trichet welcomed the positive surprises on eurozone growth and the improvement in money markets and sovereign bond markets, but warned against premature optimism. The ECB remains cautious, gives no hints yet on its exit strategy, and keeps the sovereign bonds purchase program gently simmering on the backburner, just in case. Trichet was most positive on the stress tests, which he said confirmed the resilience of the eurozone banking system toThu, 05 Aug 2010 17:25:33 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-08-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-26.htmlRather than a game-changer, today’s release of the stress test results is a first step towards improved transparency, but insufficient to bring about the rapid and major improvement in confidence in the European banking system which should have been the main goal of the exercise. It will require more homework by both market participants and policymakers to move towards full normalization of the eurozone financial system—in particular it will take some time to process all the information madeMon, 26 Jul 2010 13:19:28 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-26.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-20.htmlWhile the European bank stress test is a pivotal moment, the issue of fiscal consolidation remains equally important—in fact it is fiscal concerns that brought us to the banks stress tests. Yet the austerity debate is mis-guided: the focus should be more on how to boost sustainable growth, less on whether to prolong fiscal stimulus. The austerity debate is now not on whether fiscal tightening in advanced economies is necessary, but on when it should begin in earnest. Those who favor postponingTue, 20 Jul 2010 11:07:23 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-16.htmlThe Euro has staged a remarkable comeback over the last month, recovering from below 1.20 to the dollar to nearly 1.30. What has been driving it? Will it strengthen further, consolidate, or reverse trend? And should its appreciation be welcomed? There are several factors at work. The first is a paradoxical situation where, while the recovery is clearly more robust in the US than in the eurozone, the Fed sounds more dovish and seems to be toying with the idea of a renewed wave of quantitativeFri, 16 Jul 2010 11:20:11 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-08.html“Do not underestimate the eurozone” was the message that Mr. Trichet sent in today’s press conference. It was a message carefully calibrated to instill confidence without sounding too optimistic, and it was exactly the right message to send at the current juncture. Over the last couple of months, fears of a double-dip recession have at times escalated into needless scaremongering that risks undermining already fragile business and consumer confidence, aswell as popular support for much neededThu, 08 Jul 2010 17:25:37 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-07-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-17.htmlSpanish policymakers seem to perform better under pressure than Spain’s football team so far: today’s debt auction went well, Finance Minister Salgado confirmed that bank stress tests will be published on an individual institution basis, and the government has pushed through by decree a set of labor market reform measures. Labor markets reforms were an opportunistic defensive play, not elegant, but effective—it is on bank stress tests that Spain will need to show the same combination ofThu, 17 Jun 2010 12:12:28 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-15.htmlAs market pressure has pushed fiscal consolidation to the top of the agenda, the debate on austerity measures has taken extreme ideological overtones. Supporters of fiscal consolidation are often accused of pushing the global economy towards a double-dip plunge into recession; the underlying assumption is that as policymakers saved us from a new Great Depression, governments can do no evil and should be trusted to follow whatever fiscal path they consider appropriate. This debate is misguidedTue, 15 Jun 2010 13:25:00 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-03.htmlWhile comparisons of the current situation with the pre-Lehman days are exaggerated, there is one troubling similarity: lack of information is again playing a major role in undermining market sentiment, at least in Europe. This is particularly evident in the re-emergence of liquidity tensions and counterparty risk in the Eurozone banking system, which reflects both rediscovered uncertainty on the extent of preexisting vulnerabilities and new fears on the risks posed by exposure to sovereignThu, 03 Jun 2010 16:03:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-06-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-21.htmlThe war that politicians have declared against the markets might end in a Pyrrhic victory. It was the German Chancellor, Angela Merkel, who chose the war metaphor to characterize the governments’ effort to restore stability in European sovereign bond markets. There is a sad and bitter irony in this: European economic and monetary union was launched to prevent further wars on the continent, and now the only thing that can hold European countries together seems to be a new war—albeit symbolic.Fri, 21 May 2010 13:30:00 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-19.htmlBeyond the surprise at how Europe continues to shoot itself in the foot, perhaps the main lesson of the last twenty four hours is that we really should not underestimate the depth and the impact of the popular reaction unleashed in Germany by the “shock and awe” package announced ten days ago. The German regulator Bafin announced yesterday it has banned the shorting of ten major German financial stocks as well as the naked short selling of eurozone sovereign bonds. The announcement was madeWed, 19 May 2010 18:00:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-19.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-17.htmlThe ECB argues that its interventions in sovereign bond markets are narrowly focused and do not constitute “quantitative easing”. Some observers disagree, and it is perhaps debatable. But there is no doubt that the ECB’s recent media campaign is definitely focused, and could in no way be construed as “communicative easing”. Over the last few days, ECB President Trichet has given interviews to German television station ZDF, to the leading German financial daily Handelsblatt, and to the GermanMon, 17 May 2010 07:57:47 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-07.htmlThe ECB today sent a strong, yet carefully calibrated message: ensuring price stability over the medium term remains the bank’s paramount concern, but at the same time it will stand ready to quickly deploy non-conventional measures if and when needed to maintain financial stability, without jeopardizing its primary target. Mr. Trichet said there had been no discussion of possible direct purchases of government bonds. Trichet urged governments to implement fiscal measures to permanently reduceFri, 07 May 2010 08:24:58 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-06.htmlThe threat that contagion might eventually morph into panic and spiral out of control is very real, and the reaction of eurozone policymakers remains dangerously counterproductive. Demonizing markets, implicitly casting investors as heartless speculators against the tragic background of the Greek riots, is outright irresponsible and increases the risk of greater financial instability. Current bond yield spreads on peripheral countries do not seem unreasonable given the limited (if any)Thu, 06 May 2010 14:46:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-05-06.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-29.htmlThe ECB’s exit strategy may have led it up a blind alley—through no fault of its own. As the mishandling of the Greek crisis has triggered fears of a systemic crisis that might engulf the eurozone’s sovereign debt markets and financial sector, any acceleration in the withdrawal of liquidity is for now off the table, and prospects for rate hikes even more uncertain. In fact, the ECB is now being asked to consider substantial purchases of government bonds as a last resort in case contagionThu, 29 Apr 2010 11:45:13 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-22.htmlWith the eurozone budget deficit reported at over twice the 3% of GDP limit, and spreads on Greek government bonds skyrocketing, the Bundesbank is striking back, concerned that the hard-earned credibility it had bequeathed to the ECB might be squandered. After a new upward revision to Greece’s 2009 budget deficit, and with open talk of a possible debt restructuring down the line, confidence in the eurozone is increasingly fragile. The ECB’s sudden turnaround on its collateral policy has beenThu, 22 Apr 2010 13:18:44 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-08.htmlThe French writer Georges Perec, in an impressive display of virtuosity, wrote an entire novel without using the letter “e”, the “disappearance” of which was also central to the plot. ECB President Trichet today stressed that Europe needs more than ever the “E” in EMU, that is the economic part of the union, and in particular the fiscal coordination and discipline targeted by the Stability and Growth Pact. Yet the E in EMU has also disappeared over the last ten years: the SGP has provedThu, 08 Apr 2010 18:17:16 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-04-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-23.htmlThe political debate on intra-eurozone imbalances has become ferociously acrimonious, and its negative consequences risk extending well beyond the Greek episode. We seem to be at an impasse, with some EU countries calling on Germany to boost consumption, and Germany claiming it has simply played the game better, and protesting that calls for it to change strategy are tantamount to protectionism. We have started to take a closer look at the data, and a few interesting facts stand out: withinTue, 23 Mar 2010 09:49:35 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-15.htmlThe potential creation of a European Monetary Fund has suddenly  gained currency in the policy debate, after key German government officials have expressed explicit support for the idea. In my view, this would be an extremely counterproductive move: it would be an admission of defeat, it would give birth to a redundant regional policy institution at a time when the need for global policy coordination has been amply demonstrated, and it would distract attention from the steps needed toMon, 15 Mar 2010 14:37:08 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-05.htmlThe game of brinkmanship between Greece and the eurozone continues, and now it is Greece’s turn to step up pressure, threatening it might turn to the IMF if the EU does not offer financial support—even after the ECB again warned Greece not to flirt with the IMF. Indeed why shouldn’t Greece call the IMF? The same fiscal adjustment already pledged would then secure generous financial support, lowering borrowing costs to more tolerable levels. Moreover, it would strengthen market confidence, asFri, 05 Mar 2010 14:51:21 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-04.htmlMr. Trichet today confirmed that the ECB will keep outstanding liquidity ample for the time being while shortening its duration, to be able to withdraw it in a prompt and flexible way. The steps outlined today were in line with what we advocated, and I still believe we will see short term market rates remain low through the summer and then rise gradually back in line with the Refi, opening the way for a first rate hike in Q1 2011. The ECB gave a ringing endorsement to Greece’s latest effortsThu, 04 Mar 2010 17:04:31 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-03-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-02-04.htmlPredictably, all the action at today’s ECB press conference was on the debt situation of Greece and other countries at the eurozone’s “periphery”. Mr Trichet again tried to persuade markets that they should be looking at the eurozone as whole, which he argued compares “flatteringly” to its peers on the fiscal front, rather than at individual countries, some of which do not look all that good… He argued that the eurozone offers ex-ante support in the form of the easy and cheap financing ofThu, 04 Feb 2010 18:43:40 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-02-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-02-03.htmlAt the press conference on Thursday, ECB President Trichet will again be asked about Greece, and he might be tempted to again draw a parallel between Greece and California. He should not. True, California has a much greater weight in the US economy than Greece in the eurozone; and this in turn implies that while Greece suffers from a far higher debt/GDP ratio than California, both are negligible as a fraction of eurozone and US GDP respectively. But that is where the similarities end, and onceWed, 03 Feb 2010 07:41:19 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-02-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-01-27.htmlThe remarkable success of Greece’s latest bond issue has been remarkably short-lived, and today’s developments confirm that the eurozone’s fiscal problems will continue to flash red on the markets’ radar screen: fiscal positions are precarious in a number of countries, the government’s response is too often hesitant and timid, and the lack of effective mechanisms to enforce fiscal discipline is exacerbating tensions between fiscal “hawks” and “doves”. These political and market tensions willWed, 27 Jan 2010 16:56:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-01-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-01-14.htmlA relatively uneventful meeting as expected, with no fresh hints on how the exit strategy will move forward. The most interesting part of the conference, in my view, is where it brought to light some of the trickiest landmines ahead--Mr Trichet elegantly sidestepped them in the Q&A, clearly hoping they will not really be encountered in the path ahead. Greece featured prominently, and Trichet delivered a message of tough love: (1) collateral rules will not be changed for any single country;Thu, 14 Jan 2010 17:11:17 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2010-01-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-12-03.htmlThe ECB set off on the slippery exit path with the right combination of confidence and caution. It has caught the market off guard with the decision of holding the last 12 month LTRO at variable rate, while at the same time giving a very clear indication of both the logic underlying the exit strategy and of the next concrete steps—for the time being, the ECB looks ahead of the curve and in control. Setting a variable rate on the last 12 month LTRO while maintaining a fixed rate and fullThu, 03 Dec 2009 18:44:18 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-12-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-12-02.htmlUntil a week ago, moral hazard seemed to have emerged as the one unambiguous winner of the financial crisis. A number of financial institutions have been bailed out, troubled emerging markets have been rescued by the IMF with relatively light conditionality, and policymakers have de facto launched a global bailout with their unprecedented monetary and fiscal stimulus. As a consequence, the current policy debate has a strong focus on eliminating or circumscribing the “too big to fail” problem.Wed, 02 Dec 2009 13:06:30 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-12-02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-11-12.v03.htmlWith interest rate differentials across the major developed regions wiped out by the simultaneous adoption of ZIRP, the major crosses are moving in sympathy with the need to reduce global imbalances—even while swings in risk appetite remain the key driver of the USD crosses. And weak currencies have the implicit blessing of the respective policymakers, and of international institutions like the IMF. This is not a case of beggar-thy-neighbor, as neither the US nor the UK are deliberatelyThu, 12 Nov 2009 05:55:58 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-11-12.v03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-11-06.htmlToday’s ECB press conference confirmed that central bankers begin to see the exit ahead, but are determined to approach it extremely slowly, to avoid the risk of derailing the recovery. It also confirmed that the major central banks are ready to sign a truce with the markets to avoid a head-on confrontation on the issue of asset bubbles—although Trichet was slightly more aggressive than Bernanke, and explicitly acknowledged that maintaining the current scope of liquidity support would pose aFri, 06 Nov 2009 05:59:14 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-11-06.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-28.htmlThe good news is that Central and Eastern Europe (CEE) 2009 is not Asia 1997; the bad news is that it is not Asia 2009 either, but looks more like Western Europe 2009: whereas emerging Asia is confidently leading the global recovery, most CEE countries are just beginning to break free of the grip of a severe recession, which in some cases is undermining political stability—witness the recent government crisis in Romania. Overall, the picture is much brighter than most commentators expected notWed, 28 Oct 2009 14:11:37 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-21.htmlGlobal quantitative easing has worked with a vengeance, fueling a robust asset price reflation which is supporting the economic recovery and has dissipated fears of consumer price deflation. It has worked so well, in fact, that some fear that bubbles are already back. I disagree. I do not think asset prices have run ahead of fundamentals yet, although they will if they do not slow down soon. I also do not believe that major central banks are ready to lean against the wind yet: asset priceWed, 21 Oct 2009 10:42:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-09.htmlIn a relevantly uneventful press conference, Trichet came under pressure on two issues: FX developments, and the situation in the European financial system in the light of the September Long Term Refinancing Operation. On FX, he tried to signal that there is serious international commitment to limit further EURUSD upside—but markets will quickly call the bluff. Coordinated intervention is clearly not in the cards, and without it the ECB has run out of ammunition on the FX front. Trichet wasFri, 09 Oct 2009 05:55:53 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/market-sense/2009-10-09.html