Insight into the ECB – BBH

By FXStreet FXStreet (Guatemala) – Analysts at Brown Brothers Harriman noted that investors, fellow central bankers, and the media continue to try to make sense of last week’s ECB surprise.

Key Quotes:

“We had argued that given the market positioning, especially the dramatic accumulation of speculative short euro positions since the middle of October, that the market was prone to a correction.

The issue was really one of timing. Was it going to materialize after the ECB meeting or after the US jobs data? Or could it wait until after the FOMC meeting. This means that there was a reasonable chance of a recovery in the euro even if participants had not been disappointed by the ECB’s action.

Former Luxembourg central banker, and now a member of the executive board of the ECB, Mersch provided some insight into what happened. His comments seem to be the most cogent comments. Earlier comments by Draghi and Austria’s Nowotny were too defensive, blaming the market entirely for misunderstanding.

Mersch made several interesting points that should not be lost in the noise. Moreover, they may help investors understand how the ECB works and what …read more

Source:: FX Street