ECB’s Draghi to the Rescue, Gives Hope to Market Bulls

(eToro Blog) It’s incredible the effect a few well chosen words can be but especially when they’re uttered by an individual who can actually put “his” money where his mouth is, so to speak. Yesterday, Mario Draghi, the head of the European Central Bank, did just that; he made a vow to investors that he and the ECB would not allow a Eurozone breakup to occur and would do all within the powers of the ECB remit to ensure that Italy’s and Spain’s borrowing costs are held in check. Analysts are hopeful that Draghi’s comments could be the turning point in the debt crisis, and will help to restore risk appetite.

What is hoped is that the ECB’s words and actions will provide the impetus for some other central banks (most especially, the Fed but, too, the Bank of England) to step up to the plate themselves. One strategist believes it could trigger a coordinated effort to jump start what has been stalled global growth.

Of course there is always a niggling doubt that those bold comments won’t be backed up with deeds; analysts say that markets need to see some quick and decisive action, such as the restoration of its asset purchases scheme, to keep the optimistic momentum flowing. Markets will know one way or another when the ECB meets next Thursday, but ahead of that is the Fed decision on Wednesday, and there are growing expectations that the U.S. central bank might make a similar announcement. The Bank of England’s Monetary Policy Committee will also make their policy announcement next Thursday.

Draghi’s words gave a broad boost to markets yesterday, with equities higher in Europe and the U.S., oil and gold getting a solid rise and the Euro only now slipping off a 2-week peak. The EUR/USD is currently trading higher at 1.2306 just off the session high of 1.2313; sentiment on OpenBook is bullish by a 55/45 ratio. OpenBook guru thesizzle from Tanzania scored big on a number of closed positions. The guru closed out seven long positions with profits that ranged from 17.39% to 81.33%, while a single short gained 21.00%. The guru tells his 1579 copiers and 4641 followers that with a fresh day and a new start, he is going short with a top target of 1.2400/40.

Gold is also higher, trading at 1619.05 currently, with sentiment on OpenBook slightly bullish by a 53/47 ratio. OpenBook trader vitverag from Hungary took a small loss of 5.91% on a short position yesterday, but holds two open longs that are currently showing gains of 97.08% and 35.12%. In the past month, the trader’s 29.1% allocation in gold has yielded the highest gain in the portfolio at 26.6%.

NYMEX-traded WTI oil is trading above $90 a barrel, currently at $90.10, and sentiment on OpenBook is predominantly bullish with 78% of traders buying against 22% selling. OpenBook trader mnavedanjum from Pakistan closed two profitable longs with gains of 33.64% and 24.55%, which followed a pair of shorts with gains of 17.33% and 19.09%. The trader’s last week was a very good with, with profits of 246.4%, which looks to be a good start for a trader who only recently established this OpenBook account.

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