Market News: ECB not comfortable with EUR over 1.50 over medium-term

Our friends at Market News International have just run a story saying that the ECB does not want the euro over 1.5000 in the medium-term and that EUR strength could throttle the European recovery. They plan to raise their concerns at next week’s G20 meeting, the report says.

  • The ECB has little room to impact EUR/US with monetary policy, the story says.
  • Trichet hopes that the US will follow-up words with action on the strong dollar policy.
  • EU leaders are going to China before year-end to urge Beijing to accept a stronger Yuan.
  • The ECB is said to be wary of intervention without participation from the US and China.

The ECB has shown only moderate concern in its public utterances to date, but its sounds like they are working behind the scenes to engineer a weaker euro. It remains to be seen if they get help from the US, though the Fed may be doing its part by preparing the market for the removal of the phrase “for an extended time” from its next communique.

EUR/USD has dipped to 1.4810 from 1.4835.

4 Comments

  1. The problem is that the US cn’t remove any stimulus at all. We’ve heard this many times beforehow good the economy recovers and so on but fact of the matter is that everybody knows that IF any stimulus gets whitdrawn the whole card collapses. All they try is to dempen but words are meaningless without action. So another hollow bullet.

  2. That’s not the way the market will take it. They will take any shift in the language as a signal that a policy shift is ahead, because that is the Fed’s intention. They don’t want to surprise the market, they want to guide it.
    It’s kinda like the 2:00 minute warning in football. In the Fed’s case, it is more like a three to six month warning that they are getting ready to normalize rates…

  3. I am not that hopefull of “yeah the economy got its wheel and steer on” ;) Staying calm..see the same story ;) (it bothers me, myself)

  4. Some of my pumpkins are cooked; some of them now have faces carved on to them; and they are ghost riders ;) Hmmm…

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