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

Start Forex Copy Trading your Perfect Partner – FXTM

Start Forex Copy Trading your Perfect Partner – FXTM(0)

Start Forex Copy Trading your Perfect Partner. Join ForexTime cutting-edge forex copy trading programme with ForexTime Invest and match up with a suitable trader. Let them trade while you watch your potential forex profits grow. Link:  Start Copy Trading your Perfect Partner Link:  $500 Welcome Cash Bonus Promo Link:  Receive $30 Tradeable Credit Free Bonus

150% Chinese New Year Bonus Promotion – FXCL Markets

150% Chinese New Year Bonus Promotion – FXCL Markets(0)

150% Chinese New Year Bonus Promotion to all FXCL Markets clients. Deposit any amount to your trading account and Receives 150% Chinese New Year Bonus Promotion Link:  150% Chinese New Year Deposit Bonus Link:  100% Smart Deposit Bonus Link:  130% Youtube Deposit Bonus Available to: All clients. Bonus Offer: 150% Chinese New Year Deposit Bonus

Trading Cryptocurrency with Leverage 1:1000 – NordFX

Trading Cryptocurrency with Leverage 1:1000 – NordFX(0)

NordFX clients are enjoying the ability to Forex Trading the most popular cryptocurrencies Bitcoin, Litecoin and Ethereum using a 1:1000 leverage ratio Link:  Trading Crypto with Leverage 1:1000 Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Why should one trade with us? The trading is

Receive 55% Bonus on your Deposit Money – NordFX

Receive 55% Bonus on your Deposit Money – NordFX(0)

55% Deposit Bonus Promotion to All New and Existing Customers. 55% Bonus on Deposit Fund your account with $100 – $8,000 and receive a trading bonus up to $4,400! Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Available to:  All new and existing accounts Bonus offer: 

Up to 100% Bonus on your initial Deposit – FXtrade777

Up to 100% Bonus on your initial Deposit – FXtrade777(0)

Up to 100% Bonus promotions on your initial Deposit to all FXtrade777 New clients. Get more for your money at FXtrade777 with an unforgettable Up to 100% Welcome Bonus. Link:  Up to 100% Bonus on your initial Deposit Bonus Offer: Up to 100% Bonus promotions on your initial Deposit to all FXtrade777 New clients. FXtrade777

FIFA World Cup Football Matches Tournament – FBS

FIFA World Cup Football Matches Tournament – FBS(0)

FIFA World Cup Football Matches Tournament. Participate in the contest and win the visit to the biggest football tournament of the year in Russia. Link: FIFA World Cup Football Tournament Link:  Just Share a Greeting Card and Gifts Link:  $50 Free Will be credited to Your Account Link:  $88.8 Forex No Deposit Bonus Link:  $123 Forex

100% Withdrawable Deposit Bonus up to $5000 – NordFX

100% Withdrawable Deposit Bonus up to $5000 – NordFX(0)

100% Withdrawable Forex Deposit Bonus up to $5000. The 100% Withdrawable Deposit Bonus and the initial deposit can be withdrawn after the required number of lots is closed. Profits can be withdrawn without restrictions. Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Available to: All

50% First Deposit Bonus Prom – Hirose Financial UK

50% First Deposit Bonus Prom – Hirose Financial UK(0)

50% First Deposit Bonus Promo Maximum Bonus Amount is $1000 for all customers. The 50% Special Bonus offer for Hirose Financial UK customers who make a deposit to Binary Options account. They can withdraw deposit and profit at anytime!! Link:  50% Deposit Bonus Promotion Available to: All new traders Bonus Offer: 50% Special Bonus offer

200% Pending Bonus for your Next Deposits – CTTrade

200% Pending Bonus for your Next Deposits – CTTrade(0)

200% Pending Bonus for the Next Deposits. Just make the re-deposit and during the day we will credit your 200% Pending Bonus. Link:  200% Pending Bonus for the Next Deposits Available to: All new account How to get Pending Bonus? Just make the re-deposit and during the day we will credit your bonus. This bonus

Free SERENITY Tokens New Year Promotion – Grand Capital

Free SERENITY Tokens New Year Promotion – Grand Capital(0)

Receive free SERENITY tokens for Forex, futures and cryptocurrency trading. The promotions is supported by SERENITY. The objective is to promote and brand the platform as a secure trading solution for trader Link:  Receive free SERENITY tokens for trading Link:  $500 Forex No Deposit Welcome Bonus Link:  Up to 444% Profit Receive for a single

read more

Forex Featured BrokerSocial Trading

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