Preview for ECB Rate Decision and Outlook for EUR-crosses

Jan 22, 2017, 00:43
Preview for ECB Rate Decision and Outlook for EUR-crosses

Draghi is expected to talk down the rise in December inflation and deliver a dovish accompanying statement due the pending Eurozone risks, such as the upcoming German and French elections, Greek and Italian debt and the Brexit.

The euro fell to a day low of $1.0607 after Draghi said underlying inflationary pressures remained subdued and that, once the base effect of rising oil prices had been accounted for, there were still no real signs of a upward trend.

Defending ECB's current monetary policy, the bank chief Mario Draghi said the quantitative easing scheme would continue until inflation in the euro area goes back ECB's objective of "under but close to 2 percent".

It comes amid growing anger in Germany over European Central Bank policies, with the eurozone's largest economy seeing a large rise in inflation.

The euro slumped Thursday after European Central Bank chief Mario Draghi signalled that the time had not yet come to wind down unprecedented stimulus measures, although equities failed to get a boost.

Poloz made this announcement in the face of potential trade troubles from President Trump, sending the Canadian Dollar Euro exchange rate crashing down -0.5% in the process.

As attention turned to the press conference with Mario Draghi, President of the ECB, he stated that inflation pressures in the EU remain subdued and that the ECB will look through any near-term inflation pickups.

It is not the first time that Draghi and Schaeuble, two of the eurozone's most powerful officials, are at loggerheads over which monetary policy to pursue.

Dealers took a speech by Yellen on Wednesday as a hint that USA rates will rise further this year.

It also held the rate on its marginal lending facility unchanged at 0.25 percent and the rate on the deposit facility steady at minus 0.40 percent - meaning banks have to pay to park their excess cash with the ECB.

"This was exactly what the euro didn?t want to hear, causing the currency to shed 0.7 percent against both the dollar and the pound", said Connor Campbell, a financial analyst at Spreadex.

Sterling climbed 0.5 percent to $1.2320, having been knocked as low $1.2254 overnight by comments from Federal Reserve head Janet Yellen that US interest rates are likely to continue to gradually climb.

Asked about incoming USA president Donald Trump's remark that the dollar is "too strong" and "it's killing us", Draghi noted that there is a "very strong worldwide consensus to refrain from competitive devaluations".

"Our objective is the inflation rate for the whole of the eurozone", he said.

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