FX.co ★ Fundamental Analysis, for September 12, 2012

The German Constitutional Court finally approved the country's participation in the so-called European Stability Fund with a dimension of 190 billion euro.
Does it mean that the approval and implementation of this fund is real? This mechanism acts a International Monetary Fund but on a continental level, enabling any of the Eurozone countries to resort to a request for financial assistance, or a rescue, if this is necessary.
This measure, taken with a delay though, which earlier implementation could have help to avoid the financial disaster in Spain and Italy, for example, can be the beginning of a sustainable solution to the above problems.
But these funds do not solve an underlying problem such as the growth of economies with debt difficulties. The financial aid will lower the cost debt taking, which already happened last week, when the ECB President Draghi announced about buying bonds without limits (a foretaste of the judgment this morning in Germany but with another name), but low-cost debt placement does not create jobs or opens industries, or increase economic activity: it only reduces the amount of money that a state shall allocate to debt interest payments. The question arises: what will you do with the extra money, and there are already some social policy elements in each country.
However, it is encouraging that Europe has taken the leadership once again and started dictating solutions, and not speeches. This reflected in the euro as the currency touched 1.2935 a few hours ago, the level it reached last on May 11, and in February 2004. As if it confirmed the maxima that "the market has memory", right?
The euro and the pound, the Swiss franc and the yen gained momentum in the last few hours. The same applies to the Australian dollar, battered in the past two weeks by unfavorable news about China's economy, and with the Canadian dollar which is also linked to oil as the peso.
Even an ounce of gold, as a faithful sought refuge, left its lateralization of the last hours, and started heading for $ 1800, not far from its record high, and not far from the $ 2,000 forecasted by experts this year.
As a board game, Europe has made its move. Now it's up to the Fed to set monetary policy. Besides, the interest rate could be maintained until mid-2015, rumors circulating in these times, and not until the end of 2014 as announced by Chairman Bernanke at recent meetings. Such action is expected to give neutral dynamics to the economy that we could see almost a year ago in the terms of growth.
Employment data which is modestly growing shows that the actions taken in 2012 have not yielded the expected results, and it appears that the Fed will announce a big injection of money, called in the fields of QE markets.

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