Minutes ago French socialist president Hollande once again climbed on top of Cloud Nine, fully hopeful that Draghi's bluff would be enough:
- HOLLANDE CITES `STRONG WORDS' BY ECB'S DRAGHI ON EURO
- HOLLANDE SAYS ALL WILL BE DONE TO `DEFEND, PRESERVE' EURO
This led to a brief spike in the EURUSD until moments later, CNBC's Steve Liesman, by way of the Bundesbank, just converted Cloud Nine into Cloud Nein, which in turn was promptly pulled from under Hollande:
- BUNDESBANK TELLS LIESMAN MONETARY POLICY SHOULD FOCUS SOLELY ON PRICE STABILITY, STATES NEED FISCAL INTERVENTION
This means the Bundesbank does not give its blessing to SMP reactivation, and does not all "all" to be done to defend the Euroe. And with that the German response to Draghi's bluff is complete, just as predicted. Check to Mario who is suddenly boxed in a very big corner.
The market response is immediate:
- SPANISH 10-YEAR BONDS ERASE ADVANCE; LEAVES YIELD AT 6.62%.
And this latest headline is certainly not going to help:
- GERMAN SAVINGS BANKS GROUP REJECTS BANK LICENSE FOR ESM
There goes the crutch that led the EURUSD rise last week on Ewald Nowotny's Wednesday rumor.