Barclay’s analayst Philippe Gudin (bolding mine):
- Says the European Central Bank’s President Draghi’s Jackson Hole speech on Friday was “a major event” and “a turning point in ECB rhetoric”
- Draghi “called for action on both demand-and supply-side policies and urged European governments to deepen fiscal coordination and speed up structural reforms”
- It”also confirmed that, beyond liquidity injections through the TLTROs and outright ABS purchases, the ECB was ready to do more if necessary”
Draghi was explicit, saying:
- “the recent decline in medium-term inflation expectations as a source of concern for the Governing Council, which we believe could require additional easing measures in the near term should it continue”
Also, Draghi’s discussing fiscal policy was “a major breakthrough”:
- “Explicitly, it supports the view that more fiscal coordination is needed; implicitly, it means that some countries could run a more expansionary policy (in particular Germany)”
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Yesterday big gap down in the EUR/USD (on Monday morning … and now its subsequent zero gap-fill) is the market’s response to Draghi’s speech. The sideways action in EUR/USD since the gap looks to me like the only ‘correction’ we could well get and the continuation of the trending move lower in EUR/USD seems the most likely course. Thoughts welcome.
Excellent ….
