Analysts at CIBC see the EUR/USD pair rallying in 2020 despite the new open-ended QE program from the European Central Bank (ECB) announced on Thursday.
“Outgoing ECB President Mario Draghi made his final roll of the dice this week, cutting the deposit rate further 10bp and restarting QE bond purchases. With no end date given for those purchases, the euro initially weakened, only to rally later on as investors realized that the scale of stimulus was fairly small and as such fiscal policy will be more important going forwards. In fact, at the instated 20bn euro a month pace, it would take around 12 years for the current QE programme to inflate the ECB’s balance sheet as much as the 2015-18 version of QE did.”
“A greater leaning towards fiscal rather than monetary policy is generally positive for that country’s currency, and we see the euro rallying versus the US$ in 2020 as a result.”
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.