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Forex pairs in this Article » EUR/USD (Barcelona) - ECB President Draghi has just spoken on French radio and stated that the ECB will do whatever is necessary in order to preserve the euro notes Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ.

However, although he stated that the ECB was ready to intervene, he stressed that there would always be conditions to intervention and in a worrying but clearly accurate comment he added that the current financial crisis was in the hands of EU Governments. Halpenny notes that Draghi also highlighted the fact that labour and product markets rigidities were problems in France and Italy and would have to be removed.

Looking to the data side, Halpenny believes that the the hope that domestic demand in Germany will come to assist periphery countries attempting to offset weak domestic demand through net exports looks forlorn. German retail sales plunged 2.8% in October from September. The three-month change was -1.4%. The 2.8% drop matched the lowest declines recorded since the financial crisis began.

Halpenny finishes by noting that, "The relative peace (as Draghi put it) in the sovereign bond markets means there is little prospect of the ECB changing monetary policy next week, but if the monetary policy mechanism is broken like the ECB believes, then at some point this peace is likely to be disrupted. EURUSD above 1.3000 is likely to prove temporary."
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