FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank suggested that the ECB’s went further than expected yesterday with its list of monetary policy measures. However, by the close of the European trading session yesterday EUR/USD had already given back all of its post announcement losses.

Key Quotes:

“It seems that after years of extraordinary policy measures from various central banks the market has become sceptical as to their potential impact”.

“Huge volumes of QE by the Fed, the BoJ and the BoE have been successful at stoking stock markets gains and in many countries house prices inflation also”.

“However, slow growth and elevated levels of unemployment are still widespread across the developed world. The ECB’s new TLTRO may appear to be a reasonable concept to push cheap lending out to SMEs in the most stressed regions of the Eurozone”.

“However, it is not clear to what extent banks will want to lend into this very risky sector particularly in an environment in which they are paying back existing LTRO borrowing. All these scepticism sits on top of the fact that the dovish warnings of ECB President Draghi in the May meeting had convinced investors to take short EUR positions.”

“The ECB over the past few weeks has thus managed to engineer only a “buy of the rumours, sell on the fact” pattern for the EUR; it seems that the ECB’s ability to set the EUR into a new downtrend is still limited. Going forward there is reason to suspect that downside potential in EUR/USD could be evasive until USD bulls re-emerge in force”.

“Although there are signs that US growth is picking up after a horrible winter, economic data are not sufficiently strong to draw the bulls back to the market”.

“Adding to the torpor of the dollar is the perception that it would take a rocket to move the Fed from its present course of monetary policy. While the Fed is gradually reducing the size of its monthly assets purchases, it has persuaded the market that rates will remain at their all time long for a prolonged period. We expect that the Fed funds rate will not be raised until the very end of 2015 at the earliest and afterwards that the pace of tightening will be slow”.

Related Articles
  1. Retirement

    The Best Strategies to Maximize Your Roth IRA

    If a Roth IRA makes sense for you, here are ways to build the biggest nest egg possible with it.
  2. Investing

    In Search of the Rate-Proof Portfolio

    After October’s better-than-expected employment report, a December Federal Reserve (Fed) liftoff is looking more likely than it was earlier this fall.
  3. Personal Finance

    Is An Ivy League Degree Worth It?

    In 600 B.C. Aesop determined that a bird in the hand was worth two in the bush. Warren Buffett claims that this axiom can be used to determine the most valuable uses of capital. In this article ...
  4. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  5. Chart Advisor

    ChartAdvisor for November 27 2015

    Weekly technical summary of the major U.S. indexes.
  6. Retirement

    Suddenly Pushed into Retirement, How to Handle the Transition

    Adjusting to retirement can be challenging, but when it happens unexpectedly it can be downright difficult. Thankfully there are ways to successfully transition.
  7. Mutual Funds & ETFs

    The Democratization of the Hedge Fund Industry

    The coveted compensations of hedge fund managers are protected by barriers of entry to the industry, but one recent startup is working to break those barriers.
  8. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  9. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  10. Financial Advisors

    Tips on Passing the CFA Level I on Your First Attempt

    Obtain valuable tips and helpful study instructions that can help you pass the Level 1 Chartered Financial Analyst exam on your first attempt.
  1. Are secured personal loans better than unsecured loans?

    Secured loans are better for the borrower than unsecured loans because the loan terms are more agreeable. Often, the interest ... Read Full Answer >>
  2. Is Israel a developed country?

    Israel is considered a developed country, although it has substantial poverty and large income gaps. The International Monetary ... Read Full Answer >>
  3. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  4. How many free credit reports can you get per year?

    Individuals with valid Social Security numbers are permitted to receive up to three credit reports every 12 months rather ... Read Full Answer >>
  5. Is the Wall Street Journal considered to be a conservative publisher?

    The Wall Street Journal is controlled by Rupert Murdoch via Dow Jones Publications, which in turn is owned by Murdoch's News ... Read Full Answer >>
  6. Is Spain a developed country?

    Spain is a developed country. Nearly all organizations that analyze development status classify it as such. Spain has a strong ... Read Full Answer >>

You May Also Like

Trading Center