Euro sign

As expected, interest rates remain at the same level, as does the bond purchase amount of €30 billion per month. However, a new angle from the ECB statement at 12:45pm has a slight hawkish element to it: The ECB has removed an option to increase both the size and the duration of the quantitative easing program.

I was surprised by this. Despite better economic data from the EU, the ECB has remained extremely accommodative with its easing policy.  Indeed today, from an anecdotal basis given the situation in Latvia and the very recent Italian elections, there was an argument not to move to a slightly more hawkish tone.  That said, during the subsequent press conference, Draghi remained as dovish as at previous meetings. To concur this element, EURUSD moves lower from 1.2440 to 1.2390 and DAX moves back to a new intraday high of 1.2300 for the session.

Unfortunately, the situation remains the same for the ECB. Despite the strong economic growth, the easing policy remains remarkably accommodative, yet inflation remains well below the target of 2.0%. Overcoming this in light of a potential trade war with the US will be problematic.

Jordan Hiscott,

Chief Trader


The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.

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