Forex Flash: Draghi shows his poker face – Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale believes that Draghi caught the market unawares yesterday by talking down the Euro yesterday, but by warning of the downward impact on inflation of the currency's strength, he stuck to the ECB's traditional framework.
He writes, "Mr Draghi may not want to see the European economy crushed by a strong currency, but nor does he want to match the Fed, MPC and BOJ in maintaining super-easy policies after the 'crisis' is over. The Euro fell, but the basic direction of monetary policy is still Euro friendly. A turn (down) in EURUSD is more likely to come from rising US (market) rates in H2, than from yesterday's meeting. Still, a slightly softer tone from the ECB is 'good' for CEE currencies and for GBP too. EURNOK and EURSEK will probably drift lower."
He writes, "Mr Draghi may not want to see the European economy crushed by a strong currency, but nor does he want to match the Fed, MPC and BOJ in maintaining super-easy policies after the 'crisis' is over. The Euro fell, but the basic direction of monetary policy is still Euro friendly. A turn (down) in EURUSD is more likely to come from rising US (market) rates in H2, than from yesterday's meeting. Still, a slightly softer tone from the ECB is 'good' for CEE currencies and for GBP too. EURNOK and EURSEK will probably drift lower."
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