• 1 day New Study Equates Luxury Cars With Low Self-Esteem
  • 2 days Rio Tinto To Spend $1 Billion To Reduce Its Carbon Footprint
  • 2 days The Ultra-Wealthy Lost $140 Billion In One Day
  • 3 days Three Energy Casualties In The Coronavirus Crisis
  • 4 days Markets Crumble As Coronavirus Panic Peaks
  • 4 days Cobalt May Be The Key To Clean Hydrogen Fuel
  • 6 days How Taxpayers Are Bankrolling The EV Revolution
  • 7 days The Coronavirus Is Crushing China’s Car Market
  • 8 days Fighting For Survival In The Streaming War
  • 8 days Want A Job? Forget About A Bachelor’s Degree
  • 9 days Another Major Car Maker Is Backing Hydrogen
  • 9 days Are Americans Finally Sold On Soccer?
  • 10 days Is The Tech Bubble About To Burst?
  • 10 days Coronavirus Could Cost Tourism Industry $80 Billion
  • 11 days What Web Traffic Trends Can Tell Us About The World
  • 11 days Miners Face Greater Headwinds
  • 12 days Boris Johnson Proposes Billion Dollar Bridge To Northern Ireland
  • 13 days Goldman Slashes Oil Price Forecast By $10
  • 14 days Tesla Raises $2 Billion In Share Selloff
  • 14 days What The T-Mobile Takeover Of Sprint Really Means For Markets
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Ashraf Laidi

Ashraf Laidi

AshrafLaidi.com

Ashraf Laidi is the author of "Currency Trading and Intermarket Analysis: How to Profit from the Shifting Currents in Global Markets" - Wiley Trading.

Contact Author

  1. Home
  2. Markets
  3. Other

ECB Preempts Fed Inaction, PBOC Action

The ECB succeeded in weakening the euro and bund yields with an aggressive downgrade of 2015-2017 forecasts for GDP and CPI, while announcing an increase in the issue share limit of bonds included in QE purchases to 33% from 25%. The increased limit means the ECB can buy a higher share of an individual nation's bond issue, giving it more freedom of concentration in particular issues.

ECB Preempts Fed Inaction, PBOC Action - Yellendraghi

CPI forecast for 2015 was downgraded to 0.1% from a previous 0.3% reading, while 2016 CPI was revised to 1.1% from 1.5%. GDP forecasts for 2015 and 2016 were also downgraded to 1.4% from 1.5% and 1.7% from 1.9% respectively.

The ECB's decision to deepen (not broaden) the purchase of individual issues does not imply an increase in the size of QE but allows it more flexibility in producing results from current level of purchases. Although Draghi asserted there was no discussion on increasing QE size and cutting interest rates, the possibility for more stimulus cannot be ruled out before year-end --another reference to "We'll do what it takes".


Draghi's pre-Fed Inaction

On a day when Eurozone composite PMIs (combining services and manufacturing)hit a 4-year high, Draghi aggressive downgrade is widelydesigned to cushion the impact of potentially euro-boosting events such as aFed decision hold rates unchanged later this month, further PBOC easing and freshCNY devaluation. All of these factors are seen as euro-positive, which wouldfurther complicate the ECB's task to achieve price stability at a time of prolongedenergy prices.

The question on EURUSD implications remains that of relative interest rate differentials as much as it is about the reality of capital flows and further unwinding of euro-carry trades from unavoidable CNY weakness, once China's president returns home from G20 tour.

 

Back to homepage

Leave a comment

Leave a comment