Stockpair traders should keep an eye on these events today:
|04:45||CNY||HSBC Manufacturing PMI||50.0||50.2|
|09:45||EUR||French GDP (QoQ)||0.0%||0.0%|
|10:30||EUR||German Manufacturing PMI||51.2||51.4|
|10:30||EUR||German Services PMI||54.6||54.9|
|11:30||GBP||BBA Mortgage Approvals||42.9K||42.8K|
|15:30||CAD||Retail Sales (MoM)||1.0%||1.1%|
Draghi Downer For The EUR But Lets It Hold Its Head Up
September 23, 2014
The EUR gave up earlier gains on Monday to trade at 1.2830 after ECB President Draghi’s speech. At his address before the EU Parliament, ECB’s Draghi said it was too early to assess the impact of the TLTRO’s on the broader economy and added the take-up was within the range expected by the ECB. While Draghi said the ECB stands ready to use additional unconventional measures, structural reforms are crucial to complement ECB policy. Draghi, who in the past could talk up the EUR without any action has burned out. Traders want to see real action from the ECB. The stimulus program launched just a few months ago, is believed by many to have been too little too late and need real stimulus similar to the Quantative Easing adopted several years ago in the US.
ECB’s Praet said that market perception about the ECB willingness to talk down the euro was incorrect. The quotes were largely ignored. No big change or big stories to activate trading in the major USD cross rates during the US trading session. US equities opened also in the red, but the losses are moderate and hadn’t a big impact on interest rates or on the dollar. The testimony of ECB’s Draghi before the EU Parliament was no game‐changer.
The head of Germany’s Bundesbank has criticized the European Central Bank’s recent cut in borrowing costs and its pledge to buy repackaged debt, saying they took pressure off governments to implement needed reforms. Jens Weidmann told Der Spiegel magazine that the moves went beyond previous attempts to encourage banks to lend more, and could free banks of risk at the cost of the taxpayer.
“In my view the recent decisions by the ECB Council (are) a fundamental change of course and a drastic change for the ECB’s monetary policy,” he said in an interview published over the weekend. “No matter how you think about the content of the decisions, the majority of the ECB Council members are signaling with it that monetary policy is ready to go very far and to enter new territory,” he stated.
The comments come at a difficult time for the ECB, just days after an offer of cheap credit to banks fell flat, calling into question a central plank in its plans to shore up the euro zone’s flagging economy.
While economic recovery is in full swing in the US and the Federal Reserve there has started to withdraw support, the ECB has stepped up efforts to unblock lending to firms and boost growth, for example by buying repackaged loans.