5 Reasons why ECB's Draghi won’t talk down the Eur today - ANZ

Dhwani Mehta FXStreet

FX Strategists at ANZ are out with 5 key reasons why the ECB President Draghi could refrain from jawboning the Euro at its monetary policy announcement due later on Thursday.

Key 5 Reasons:

"First, the euro is not overvalued and its pace of appreciation has been relatively moderate.

Second, the current strength in the exchange rate reflects improved confidence in the euro area's economic prospects and fading deflationary risks.

Third, the ECB is approaching the end of its current QE program and has recently dropped its pervious reference to the possible need for lower interest rates.

Fourth, the average EUR/USD rate for the first eight months of this year has been 1.1050, compared with 1.1160 for the first eight months of last year.

Fifth, it might confuse well-planned policy guidance to try and weaken the exchange rate at a time when the ECB will soon be providing details on a the aftermath of its current QE program, which is widely expected to involve communication of details of a tapering program or reduced asset purchases at the 26 October meeting,"

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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