Draghi: Please don’t let me be misunderstood – Westpac

By FXStreet Sean Callow, Research Analyst at Westpac, suggests that with a week to assess the fallout from the ECB’s raft of policy easing measures, they remain more impressed than the FX market seems to be.

Key Quotes

“EUR/USD was just below 1.10 as the various new policies were revealed, slipping to about 1.0825 in response. But the euro then reversed in a nasty squeeze during President Draghi’s news conference, a move widely blamed on his statement (twice) that “we don’t anticipate that it will be necessary to reduce rates further.” So with the euro trading considerably stronger than pre-meeting levels a week later, does this mean Draghi has again failed to deliver?

Well if your only metric is the currency then the meeting would certainly be a disappointment so far. But Draghi’s press conference made clear that the euro is not high on the list of priorities, with very little talk of exchange rates. This makes sense in light of the Eurozone’s growing current account surplus, which is now 3% of GDP, a record surplus since the euro’s launch in 1999.

Instead the ECB took aggressive steps to drive both government and private sector yields even lower, boosting asset purchases to a whopping EUR80bn …read more

Source:: FX Street