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9 Jun 2014
Markets still gauging the ECB measures - Investec
FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, notes markets continue to assess the recent ECB decisions.
Key Quotes
"The market continues to digest the unprecedented action the European Central Bank (ECB) took on Thursday, dropping rates (introducing a negative deposit rate) and creating more attractive credit conditions, in an attempt to provide more liquidity to the Euro-zone economy and avoid deflationary threats. The reality is that whilst the single currency fell in anticipation of the meeting, the recovery since is due to plenty of technical support and the signs that the market is happy to own euro’s, as market sentiment warms to a region that is appearing to get it’s ‘house in order’."
"An ECB Governing Council member over the weekend attempted to hammer home the key aims of Thursday's policy adjustment's. He said, "Clearly, what we wanted to indicate on Thursday is that for a very long time, for several years, monetary conditions will diverge between the Eurozone on one side and the United Kingdom and the United States on the other," He continued "We are going to keep rates close to zero for an extremely long time while the U.S. and U.K."
"will enter into a cycle of rate rises at some point, that is decisive for the market." Comment from high ranking officials will be key because a significant aim of Thursday’s action was to weaken the euro, so if the euro strength continues it’s likely there will be an orderly queue to deliver bearish comments on the single currency."
Key Quotes
"The market continues to digest the unprecedented action the European Central Bank (ECB) took on Thursday, dropping rates (introducing a negative deposit rate) and creating more attractive credit conditions, in an attempt to provide more liquidity to the Euro-zone economy and avoid deflationary threats. The reality is that whilst the single currency fell in anticipation of the meeting, the recovery since is due to plenty of technical support and the signs that the market is happy to own euro’s, as market sentiment warms to a region that is appearing to get it’s ‘house in order’."
"An ECB Governing Council member over the weekend attempted to hammer home the key aims of Thursday's policy adjustment's. He said, "Clearly, what we wanted to indicate on Thursday is that for a very long time, for several years, monetary conditions will diverge between the Eurozone on one side and the United Kingdom and the United States on the other," He continued "We are going to keep rates close to zero for an extremely long time while the U.S. and U.K."
"will enter into a cycle of rate rises at some point, that is decisive for the market." Comment from high ranking officials will be key because a significant aim of Thursday’s action was to weaken the euro, so if the euro strength continues it’s likely there will be an orderly queue to deliver bearish comments on the single currency."