European Central Bank

European Central Bank will decide as soon as next month to stop some of its emergency stimulus measures. The ECB last week tightened the rules for the collateral it accepts against loans as it tries to restore the "proper functioning" of markets and prepares the ground to unwind unconventional liquidity programs. "Thoughts of the ECB heading down the quantitative easing exit may be viewed positively for the euro, although the implications may be mixed if it tends to work against risk appetite," said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. The ECB "will require at least two ratings from an accepted external credit assessment institution for all" asset- backed securities issued from March 1, 2010, the central bank said in an e-mailed statement on Nov. 20. In January, the ECB said it required a rating from one credit assessor. Losses in the dollar were tempered on speculation investors will reduce bets the greenback will weaken before the Thanksgiving holiday on Nov. 26.
"Amidst a holiday-shortened Thanksgiving week, markets may continue to take risk off the table in the absence of strong positive cues from equities, leaving the majors vulnerable to further retracements," Emmanuel Ng, an economist in Singapore at Oversea-Chinese Banking Corp., wrote in a research note today. Futures traders decreased bets the euro will strengthen against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed on Nov. 20. The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 11,956 on Nov. 17, compared with net longs of 25,173 a week earlier.