Subscribe to RSS

ECB Fallout: What’s Next For EUR/USD? – Morgan Stanley

Draghi disappointed markets today as the ECB eased but not enough to meet elevated market expectations, says Morgan Stanley.

“Yes he cut the deposit rate by 10bps and extended the APP by six months to at least March 2017 as we expected. But against our forecasts, Draghi did not explicitly commit to boosting the monthly pace of QE purchases. Nor did he hint at more cuts to come in the depo rate. Markets were looking for 14bps of cuts in the depo and looking for at least a 10-15bn increase in monthly QE purchases. Decisions to reinvest principal payments of bonds, expanding purchases to include local debt and an extension of MROs until end 2017 were not enough to compensate for relative inaction on the bigger items,” MS notes.

Why did he not do more? “Draghi sounded relatively upbeat on eurozone growth outlook in both the statement and in his Q&A. This was reflected in the staff projections, which were mostly unchanged. In the Q&A in particular, Draghi mentioned specifically that he believes today’s actions are adequate in helping the eurozone to reach its goal. Said differently, Draghi has told us that it would take a further deterioration in the growth/inflation outlook for the ECB to do more,” MS adds.

For latest trades & forecasts from major banks, sign-up to eFXplus

“We think risks are now skewed higher in EURUSD into the FOMC, given the buildup in short positioning we’ve seen over the last month and no signs of additional ECB stimulus nearterm. But we would reload USD longs ahead of the FOMC meeting. As we discussed in last week’s Pulse, the ‘dovish hike’ has become very consensus and the biggest risk to this view is an FOMC that fails to bring down the dots for 2016. Moreover, aggressively dovish changes to the statement may be difficult to reconcile with a data dependent approach,” MS advises.

“Indeed, over the medium term we remain EUR bears. Draghi was explicit that 2016 and 2017 inflation would be half a percent and a third of a percent lower respectively in the absence of ECB stimulus. Clearly he believes in the power of monetary policy, and disappointments in growth and inflation, particularly if financial conditions (European yields in particular) tighten following today’s meeting would ultimately lead to further easing. Today’s further cut of interest rates into negative territory will only encourage the EUR’s transition from asset to funding currency,” MS argues.

‘This content has been provided under specific arrangement with eFXnews.’

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$30 Fx Bonus to Your Account Completely Free – Fidelis

$30 Fx Bonus to Your Account Completely Free – Fidelis(0)

Get $30 No Deposit Fx Bonus Promotion in your Fidelis CM account and start your forex trading career. Open your new trading account with Fidelis CM in a few simple steps and get your $30 Fx Free No Deposit Bonus credited in your account. Link:  $30 Forex No Deposit Bonus Completely Free Available to: All

Free Forex Trading Signals Promotion – Forex Time

Free Forex Trading Signals Promotion – Forex Time(0)

FXTM Free Forex Trading Signals Spotting Trading Opportunities Just Got Easier and Up to 200% Withdrawable Cashback Rebates and get $4 Cashback back for every lot you trade. Link:  Free Forex Trading Signals Link:  Loyalty Cashback Promotions Link:  200% Withdraw able Cashback Rebates Ending Date: 31 December 2018 Available to: All Customers Bonus Offer: ForexTime

Free MT4 VPS plus 100% Welcome Bonus – FXGiants

Free MT4 VPS plus 100% Welcome Bonus – FXGiants(0)

FXGiants is offering its valued Trader  the exclusive 100% Maximiser Forex Welcome Bonus. Be rewarded with this unique offer and maximise your trading potential with NO limits. Link:  $35 No Deposit Bonus Promotion Link:  100% Maximiser Deposit Bonus. Link:  20% Bonus Advantage up to $2000 Available to: All new trading account Bonus offer: $35 No

$1000 Welcome Deposit Bonus Promotions – eToro

$1000 Welcome Deposit Bonus Promotions – eToro(0)

Get Forex Welcome Deposit Bonus Promotions code by eToro Forex Broker. Trade over 900 global instruments with most advance and friendly trading platform. Link:  Top Copy Trading Social Platforms Link: Up to $1000 Welcome Deposit Bonus Available to: All new account Ending Date: 31 December 2018 Bonus Offer: Get Forex Welcome Deposit Bonus Promotions code

$50 Forex No Deposit Welcome Free Bonus – ForexBull

$50 Forex No Deposit Welcome Free Bonus – ForexBull(0)

$50 Forex No Deposit Welcome Free Bonus is available to all new clients of ForexBull as well as for those who still haven’t got any previous No Deposit Welcome Free Bonuses from the company. Link:  $50 Forex No Deposit Welcome Bonus Available to: All new trading account Ending Date: 31 December 2017 Bonus offer: $50

Forex Global Demo Trading Contest 2017 – AETOS

Forex Global Demo Trading Contest 2017 – AETOS(0)

The AETOS Capital Forex Global Demo Trading Contest 2017, with weekly prizes and overall championship prizes to win! The total prize of the contest is worth $10,000*! Link:  Global Forex Demo Trading Contest Available to: All clients Ending Date: 31 December 2017 Contest offer: Global Forex Demo Trading Contest Top prize worth $10000 As one

100% Double Dynamo Bonus up to $10000 – FXPRIMUS

100% Double Dynamo Bonus up to $10000 – FXPRIMUS(0)

100% Double Dynamo Bonus Forex on up to $10,000 plus up to $4 cash back Rebate Bonus for every lot traded! Be rewarded with this incredible offer which is available for a limited time only Link: 100% Double Dynamo Bonus Available to: All New and Existing Clients Ending Date: 31 December 2018 Bonus offer: 100%

Get 25% Credit Bonus on their first Deposit – HYCM

Get 25% Credit Bonus on their first Deposit – HYCM(0)

Get 25% Credit Bonus available on your Deposits. Experience Some of HYCM New Features, Services and Offers Receive 25% Forex trading credit bonus Link:  25% Trading Bonus on your Deposits Ending Date:  31 December 2017 Available to:   New Clients only Bonus Offer: 25% Trading Bonus Available on your deposits to New Clients only. This promotion

50% Deposit Bonus and $5 No Deposit Bonus – FortFs

50% Deposit Bonus and $5 No Deposit Bonus – FortFs(0)

Up to 50% Bonus of Every Deposit and $5 Forex No Deposit Welcome Bonus. You Deposited $1000 on your account, chose a 50% bonus and got 500 extra dollars to the initial deposit amount. Link:  Up to 50% Bonus of Every Deposit Link:  $5 Forex No Deposit Welcome Bonus Link:  15% Support Margin Bonus Available

Get $30 Forex Deposit Bonus for an Article – FreshForex

Get $30 Forex Deposit Bonus for an Article – FreshForex(0)

Get $30 Forex Deposit Bonus for an Article Write an expert article about the Forex trading market to earn a $30 Forex deposit bonus to start earning from scratch and spread your ideas, thoughts. Link:  $30 Deposit Bonus for an Article Link:  $2017 No Deposit Bonus offers Link:  123% Deposit Bonus Promotion Available to: All

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories