ECB’s hard crisis exit

one-sixth of ECB borrowing, now they account for two-thirds.
Even as Greece has only just received its second bailout, Portugal’s unsustainable borrowing costs are prompting similar concerns as those in Greece.

Spain has been in the spotlight over its missed budget deficit target slump extension that has deepened the plight of the economy.
The euro gave up gains by 0,1 percent against the dollar to trade at US$1,2901 and with the markets closed in the US on weather issues, the euro/dollar pair could swing between gains and losses.

The euro declined by 0,4 percent to the yen trading at 102,98 but looks likely to recover breaking those resistance levels to touch 103 yen.
The euro also declined by 0,5 percent against the sterling pound its lowest levels since July trading at 80,46 pence per euro.
Market conditions have not prompted central banks to unwind monetary stimulus through a sequence of steps including raising interest rates and withdrawing excess liquidity from the economy (e.g. by selling government bonds or other assets to reverse the cash injection provided when the assets were purchased).

For the ECB, however, exiting will be more complicated because the bank is so integral to battling the debt crisis.
In the medium to long term, the ECB must balance the need to fight inflation with its effort to aid strapped European banks via cheap loans.
All in all, it’s an uncomfortable situation. Fighting inflation might require lifting rates, but any increase would raise the cost to banks of the ECB’s three-year loans, since their interest is tied to the benchmark rate (currently set at a record low 0,75 percent).

The ECB may find that it can’t raise rates or withdraw liquidity from the market as long as European banks are depending on it for cheap funding.
It is hard to envision the ECB reversing its cash injections until euro zone banks are adequately recapitalised.

According to market analysts, keeping monetary conditions so loose could reduce the incentive for governments to undertake hard reforms and for banks to sort themselves out.

Such market activity will definitely spike gold prices in the medium to long term.
Quantitative easing operations are essentially the act of capitalising inflation that has resulted from an investment bubble.
Meanwhile, the burden of the worthless debt on a central bank’s balance sheet will continue to weigh on the EU economy so that it cannot grow. Quantitative easing operations are a false offer of hope.

South African Markets
Rand forwards will definitely weaken given prevailing market conditions in South Africa.
Investors have been seen cutting bets on any rand rallies as increased bond risk weigh on the unit.

The rand continues to trade in a range like trade and currently stuck at 8,6628 per dollar.
The numbers that are coming through from South Africa mostly have been cushioned by regional support but the biggest threat to the rand at the moment is the rating agencies.

Nigerian markets
Nigerian bond market has been included in the global bond index that did trigger attention by investors as they seek to buy into an improved financial system.
Nigerian relies heavily on oil and their trade balances constitutes of 90 percent in oil exports.

Commodity markets
Gold declined by 1,2 percent to US$1 709,25 an ounce as more traders cut market bulls on certain commodities.
Crude oil fell to US$85,23 per barrel as US markets were closed on hurricane issues.
My chart of the day weather patterns could drive markets and crude oil could be affected negatively.