ECB review and Saudi bond sale – ADMISI [Video]
|What did Mario Draghi say that led to a sell-off in EUR/USD from the high of 1.1039 to a low of 1.0877? Marc Ostwald, Strategist at ADM Investor Services International believes the FX markets are back to playing interest rate differential.
Ostwald details what piece of information by the ECB sent out dovish signal….leading to a drop in Euro and explains how the bank has set the bar of expectations very low for December meeting. HE also talks about Saudi bond issue.
Key points:
Draghi did not drop hints on either side, but the comment that there are no signs of a meaningful rise in inflation was read as dovish by the markets
ECB is likely to look through energy driven high inflation and would want to see a rise in underlying CPI
Atlanta wage growth tracker showing a healthy rise in wage price inflation. FX markets are thus back to playing interest rate differential
We are in a world of financial repression and positive index based investing
The key proof of QE success is whether the central banks can get out of it
ECB is walking a tight rope. Bar of expectations has been set very lot for December. Anything more than a six month extension of a QE program would be a shock to the markets
Saudi bond sale – shows they are borrowers now and not lenders
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.