Subtle changes to language can be meaningful to EUR/USD traders – the European Central Bank has left its interest rates unchanged but seems more upbeat, allowing EUR/USD to rise. Here are three changes that have pushed the common currency higher and may continue doing so.
ECB leaves rates unchanged, sounds cautiously optimistic
EUROPEAN CENTRAL BANK JANUARY MEETING
EUROPEAN CENTRAL BANK EMERGENCY MEASURES
Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Wednesday that the latest round of bond purchases risks weakening the market's ability to discipline governments, per Reuters. "This problem (of weaker market discipline) in particular has been exacerbated by the recent increase in the PEPP," Weidmann added. "We must be careful that the emergency monetary policy measures do not become permanent. They must be scaled back after the crisis."
In a press release published on Tuesday, the European Central Bank called on banks to refrain from or limit dividends until 30 September 2021. "Dividends to remain below 15% of cumulated 2019-20 profits and not higher than 20 basis points of CET1 ratio." "ECB reiterates supervisory expectation that banks exercise extreme moderation on variable remuneration."
The Euro area price pressures will remain subdued for a prolonged period, the European Central Bank (ECB) Executive Board Member Fabio Panetta said Monday. "We can guarantee our commitment to support the recovery." "For monetary policy, this means providing certainty about financing conditions well into the future."
ECB latest analysis
ECB LATEST NEWS
December meeting review
It is almost Christmas – and while the European Central Bank holds socially distanced events, it has been able to grant gifts to markets. The Frankfurt-based institution will expand its Pandemic Emergency Purchase Program (PEPP) by €500 billion and will run it at least through March 2022.
OCTOBER MEETING REVIEW
ECB President Lagarde has laid down a gloomy picture of the economy under the second covid wave. She committed to providing additional stimulus measures in the December meeting. EUR/USD is set to remain under pressure and focused on coronavirus statistics.
SEPTEMBER MEETING REVIEW
"We do not target the FX rate" – Christine Lagarde, President of the European Central Bank. These words, alongside a headline saying the ECB prefers to remain calm on the exchange rate, sent EUR/USD toward 1.19. It is uncommon for a central bank to comment on FX – but investors were eyeing such remarks following previous murmurings about the value of the euro.
At its monetary policy meeting held on September10th, the Governing Council of the European Central Bank (ECB) decided to leave the interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively, as expected.
July MEETING REVIEW
Lagarde has picked the low-hanging fruit – and now needs her political skills to poke policymakers on the fiscal front – without scaring markets, a fine balancing act. The European Central Bank is set to leave its policy unchanged in its July meeting. The Frankfurt-based institution is set to take a break after topping up its Pandemic Emergency Purchase Program (PEPP) with €600 billion in June. This bond-buying scheme – which has fewer constraints than previous ones – now totals €1.35 trillion.