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Gain Capital senior currency strategist Eric Viloria weighs in on the ECB and the euro.
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-- -- -- the Euro is rising against the dollar today day before -- European Central Bank is expected to unveil a new bond buying plan to help ease the region's financial crisis so where will the Euro go from here joining us air Gloria senior currency strategist for -- capital air welcome to -- I think this whole idea this whole plan of a bond buying program was actually -- tell -- what -- know about that any information you have asked this planning how aggressive and successful you think it'll be.
Right so.
ECB president Draghi.
Basically initiated that he's gonna come up with -- bond buying plan at the last meeting.
In the past few days there's been a lot of these.
ECB so we've heard that they're gonna do.
Unlimited bond buys that are -- sterilize.
Up to three years maturity of buying government bonds.
How important is it that.
This is a sterilize -- -- that basically balances out the money supply so how is that -- to this whole plan.
Right so that's an accident not sufficiently weakened the Euro too much but since we've seen a lot of this bond buying optimism has been priced into the markets.
The Euro does have -- potential to.
Decline on tomorrow's disappointment because a lot of these details have already come out -- a wide -- dot have to speak tomorrow anyway but what is the ECB -- What what -- -- their job then from here right so the main question is conditionality so we know that the ECB is concerned with monetary policy transmission.
Being impaired by high government bond yields as well also fragmented euros -- So -- -- he has to tell the markets is what the conditions are going to be -- order for states to receive aid in order for the ECB to go in there and buy those bonds and depending on what these conditions are.
Then that's gonna it's gonna be up to the states like Spain and Italy.
To request aid and for the ECB to -- -- -- Yields are coming in today so that's a good sign that perhaps -- conditions will be doable because some of the conditions in the past when it led to some might argue a total overturn of the government.
France right so the yields have been coming down today they've been coming -- actually quite a bit since the last ECB meeting when this plan was first acknowledged.
And you know that could be another one of these by the rumors all the facts because a lot of people are pricing in that the ECB's gonna buy bonds and the yields specifically has been coming in on the shorter term debt you know two to three years.
Harry Dent our guest earlier this afternoon the economic forecaster predicted that the Euro the currency itself would -- to parity with the US dollar in about a year's time or so we think about forecast.
Well you know that that I wouldn't rule that out completely because there's still a lot of structural imbalances and heroes on other still lot of growth concerns I -- the recent data that we've seen recently.
With PMI numbers below fifty suggesting contraction indicates that the eurozone could be in recession right now it's pretty likely that they are.
So it's going to be a long fix further Euro -- it to get back to.
A more sustainable our region in terms of financial and economic sustainability.
So you know parity I would importer.
OK so I -- -- I am losing time of course we're always an arrest record forgive me Eric.
Quickly your comments on the Fed obviously Bernanke's mention that this situation -- is tremendous risk to the US lot of talk about QE3.
All eyes on the -- support and the next fed meeting how do you see unfolding here right so.
All options are on the table you know QE3 is on the table.
Other country unconventional measures are there but we think that it's -- labor market that the -- -- -- struggling with and that this Friday's labor report is going to be key to determining whether or not the Fed needs to act more urgently at the next meeting -- a 100000 jobs data which forecast our forecast is for up above a 100000.
We'll see what happens.
Thank you so let us.
-- the -- appreciate it.
