“The single most important task for President Draghi and the Governing Council is to clarify their message at coming ECB meetings. Even if there is no near term QE augmentation or deposit cut (where we think a 10 bps surprise translates into 2 big figures downside for EUR/$), a lot can be achieved simply by stabilizing bund yields at a reasonable level (again, what matters is stability foremost), much as the Fed or BoJ did from the start of their QE programs.”
“And while base effects are really old news, we think the time to fix things is at one of the coming meetings, since headline inflation will jump once the December and January base effects come off. There is a need to fix ECB QE and the time to do that is now.”
“Should Draghi fall flat and sound too optimistic, the short EURUSD is likely over for the year and the pair will trade back towards 1.18-1.20 into year end.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.