Forex Flash: EUR sabotaged by Draghi – OCBC Bank (Barcelona) - Emmanuel Ng of OCBC Bank notes that the EUR was sabotaged on Thursday after the ECB’s Draghi reiterated the central bank’s caution on potential economic weakness in the early part of 2013.

However, more importantly he notes that while Draghi acknowledged that the EUR’s rise was a result of increase confidence, he noted that the EUR was near its long term average and stated that the ECB would see monitor the EUR’s appreciation and its impact on price stability and growth.

Looking ahead, while he doesn´t think that Draghi has effected a reversal of the EUR, his mention of the currency does imply that the common currency may be susceptible to any re-emergence of underlying risks beyond the short term. On the flip side, Ng comments that the GBP was given a boost after incoming BOE Governor Carney did not indicate a desire to further loosen monetary policy in the UK. He finishes by writing, “Similarly, we think underlying suspicion towards the GBP may continue to prevail despite Carney’s comments. Elsewhere, USD-JPY remained trapped in recent ranges and the antipodeans continued to probe south with the broad dollar also maintaining a slight upper hand across G10 space.”

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