FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank explained that if the EUR/USD resilience implies that the ECB is still under the shadow of the Fed, then those ‘other’ European central banks are under the influence of the ECB.
“Following the ECB’s rate cuts last month, the SNB, Riksbank and the Norges Bank all became much more aggressively dovish”.
“In order to counter the risk that low rates will accentuate excessive risk taking (specifically in the mortgage market), these banks are tightening or are looking to tighten macro-prudential measures”.
“Earlier in the week Yellen also stressed that financial instability shouldn’t prompt a rate hike. It seems that the use of macro prudential measures to fine tune risk appetite are now in vogue.; rate hikes are now apparently seen as potentially too ham-fisted”.
“No wonder stock markets are celebrating. In this environment scope for significant USD gains is limited”.