With European bond and equity markets reversing Thursday’s moves, ECB President Draghi may have rested a little easier on Friday night.
Key Quotes:
“Here he was, announcing a larger-than-expected, kitchen sink style policy easing, yet monetary conditions finished tighter on the day (the opposite of what he was attempting to achieve) as a comment he made at the post-decision press conference interpreted as the ECB being done. But not anticipating having to cut rates again (which is the gist of what he said) is quite different to saying he won’t cut again. He also emphasised the other tools still at the ECB’s disposal. Perhaps it was with the benefit of a little more time, that markets better understood the subtly of his comments. That said, it was not a complete reversal.
The EUR is still sitting above it pre-decision level, even on a TWI basis, and that will no doubt be a source of frustration for the ECB. In fact, one could speak with many central bankers at present (including others that have gone down the negative interest rate path) and currencies would remain a bone of contention for them.
And herein lies the issue: many central banks desire lower currencies, but that is proving difficult to achieve as not all can have them at once. Among other things, that has been a factor contributing to ongoing global policy easing.”
(Market News Provided by FXstreet)
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