Instead of looking at single currencies, it is sometimes interesting to look at broader themes to have a better understanding of how a certain group of currencies might behave. Among the best-known themes or strategies are carry trades, which are based on the principle of systematically buying high-interest-rate currencies and selling low-interest-rate currencies. Carry trade […]
Two weeks into 2016, six weeks after easing policy at the December meeting, here we are again: the ECB is under pressure to do more. Investors continue to react to a number of related concerns, including the uninterrupted fall in oil prices, volatility in Chinese equity and currency markets, uncertainty over China’s growth and medium-term […]
Inflation is very subdued throughout the eurozone. But it is not so low just because oil prices have been nosediving. Depressed aggregate demand acts as a fertile breeding ground for a deflationary spiral to take root. Confronted by this risk, the ECB has at long last provided its unconventional response to meet this challenge. However, […]
Eurozone policy mix remains incomplete The European Central Bank had already signalled its intentions and did not disappoint investors when, on 21 January, it announced a plan to acquire sovereign debt to a minimum of €60bn monthly up to September 2016.To understand what this level of quantitative easing can do to boost the eurozone economy, […]
At Thursday’s press conference, Mario Draghi has announced the ECB’s QE programme, labelled Expanded Asset Purchase Programme (EAPP), which, in several aspects, surpasses the expectations fostered by the drip-drip of leaks in the days running up to the meeting. The main features are: The ECB will buy bonds issued by euro area central governments, agencies […]
As expected, Mario Draghi did not announce any new measures at today’s press conference. His reaction to recent disappointing economic news had, however, been widely awaited. He clearly appeared concerned about the impact of current geopolitical risks, in particular those from the Ukrainian crisis. The euro area recovery process is likely to remain fragile and […]
Since the ECB’s last Governing Council (GC) press conference, the expectations regarding the measures to be announced on 5 June have steadily increased. On top of the unusual firm pre-commitment shown at the time, economic news since then has tended to confirm the picture of a fragile recovery, too-low inflation and depressed monetary dynamics, an […]
The prolonged low level of inflation and the stubbornly high level of the euro seem to have finally convinced a majority of the ECB’s Governing Council (GC) to act. In a rare pre-committed statement, Mario Draghi announced yesterday that the GC is comfortable with acting in June. However, at this point we do not expect […]
As expected, nothing concrete was announced yesterday. Nevertheless, Mario Draghi hinted at some interesting points, but it required reading between the lines. During the press conference the ECB president emphasised the central bank’s forward guidance. On several occasions he referred to the current low level of inflation and the risk of seeing this situation last longer: […]
After two consecutive months of decline, German industrial production, including construction, increased by 1.9% m-o-m in November, much better than consensus expectations (1.5% m-o-m) and therefore more than reversing the 1.2% m-o-m contraction in October. Nevertheless, on average (October and November) for Q4, industrial production is still 0.2% q-o-q below the Q3 average. Factory orders […]
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