Before The Risk Event, The Market Was Cautious &Nbsp; The US Index Brushed 16 Months High.

On Wednesday, the market looked at the latest interest rate decisions to be announced by the European Central Bank, while waiting for the sale of bonds in Spain and Italy later this week. The euro / dollar exchange rate once again fell below 1.2700 level and renewed a 16 month low of 1.2660.

New York foreign exchange market

Some analysts pointed out that, even earlier, the expectation of the European Central Bank will cut interest rates is also one of the main reasons for hitting the euro exchange rate close to 1.2700 times.

This is also the low level of the euro dollar exchange rate since September 2010.

Earlier, it was reported that German Chancellor Merkel said the German side would be willing to provide more funds after the European stabilization mechanism started operation later this year in the eurozone permanent aid fund project.

But this is not a statement to the euro

Earlier, David Riley, a ratings agency's Fitch international credit rating director, told investors in a roadshow that the ECB needs to take more action to avoid the "disastrous collapse of the euro".

He points out that Italy is already the biggest threat to the euro zone because of its heavy debt burden and high borrowing costs.

The euro exchange rate plummeted after the announcement.

However, Fitch said on Tuesday that if there were no accidents, the French AAA would not be downgraded this year.

The European Central Bank will hold monthly meetings on Thursday and announce the latest interest rate decisions.

However, most analysts do not think the central bank will announce a rate cut, or even suggest any other major policy changes.

However, considering the possibility of sovereign finance and regional economic recession, the market widely expects that the ECB will cut interest rates this year and continue to maintain sufficient liquidity supply through all operations, including the three month loan project started last month.

Paul Robinson, Barclays Capital analyst, points out that this is also a reason why the euro exchange rate has been weakened. "Looser monetary conditions usually cause currencies with lower exchange rates unless there are other factors to counteract this effect.

The trend of foreign exchange market over the past few weeks has proved this.

He believes that the ECB is likely to announce a reduction in the benchmark interest rate to 1% of its record low in March this year, and the euro exchange rate will fall to 1.20 US dollars in one year.

Many analysts, including Richard Gilhooly, director of the US interest rate strategy at Dow Ming securities, think that the European Central Bank may even begin to cut interest rates earlier. "Have you not yet seen the reality? 1% is no longer the bottom line? Is it not a very urgent moment to protect economic growth and create more jobs?" and this is also the opinion that French President Sarkozy and German Chancellor Merkel have emphasized in recent times.

At the end of the report, Richard Jill Holly wrote, "why is the ECB still waiting? This is a question that must be answered."

On other market factors, the Federal Reserve released the latest Brown Book on Wednesday, saying that the Federal Reserve's economic growth is moderate and price pressures are also limited.