ECB will continue to be dovish, at least near-term - Danske Bank

Matías Salord FXStreet

Today the European Central Bank announced the end of the QE program in December. According to analysts from Danske Bank noted that the central bank stepped up its forward guidance on rates and said ‘interest rates to remain at their present levels at least through the summer of 2019’. They see the first ‘live’ meeting to be in September 2019.

Key Quotes:

“The ECB ended its APP as it is more confident on the path of inflation towards the aim. It emphasised that the strength of the economy (growth projection of 2.1% this year, still significantly above potential), well-anchored long-term inflation expectations and ‘continued ample degree of monetary accommodation’ are grounds to be confident on the path of inflation towards the 2% target, even after winding down QE purchases.”

“Mario Draghi struck a dovish tone throughout the press conference, in both the introductory statement and the Q&A. Furthermore, there remain a lot of ‘ifs’ in the statement (i.e. ‘state dependency’), making the further reduction of QE in Q4 and first hike timing still dependent on incoming data on economic/inflation developments.”

“With the wording ‘the Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019’, we pay close attention to ‘at least through the summer of 2019’. This suggests the first ‘live’ meeting will be in September 2019, which makes us confident on our call for December 2019 to be the first rate hike.”

“The ECB also continued to stress the importance of the reinvestment policy as its language on the reinvestment policy was unchanged from last time, i.e. that it will reinvest ‘as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation’.

“The ECB has become more confident on inflation, albeit there are risks to the growth outlook. We still think the ECB will continue to be dovish, at least in the near term. Overall, markets took the introductory statement and Q&A as dovish”.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD looks apathetic around 1.1770

EUR/USD comes under renewed pressure on Tuesday, deflating below the 1.1800 support and reversing two consecutive days of gains. The pair’s decline follows the persistent move higher in the US Dollar, as trade uncertainty dominates the sentiment ahead of President Trump’s SOTU speech.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Crypto Today: Bitcoin, Ethereum, XRP come under renewed pressure amid ETF outflows, tariff uncertainty

Bitcoin, Ethereum and Ripple are trading under increasing selling pressure at the time of writing on Tuesday, as market participants navigate renewed tariff uncertainty. The Crypto King holds above $63,000, down 2% intraday from its $64,656 open.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.