This from ANZ's take on the European Central Bank meeting and Draghi's new conference
I've pulled out the parts of ANZ's piece specific to the euro (in brief though)
Their main points re the EUR:
- The ECB acknowledged the strength of the euro and said that its strength is being monitored. But that was more a statement of fact.
- The ECB offered no clear indication of policies to address the euro's strength, and Draghi refused to comment on specific levels of the exchange rate.
More on Draghi & the euro:
Draghi ... said nothing of substance that could weaken the currency
- "the recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium term outlook for price stability."
- ECB tweaked its HICP inflation forecasts lower ... primarily a result of the exchange rate's appreciation, Draghi explained.
- Draghi did mention during the press conference that the exchange rate's appreciation could threaten the credibility of monetary policy. It would appear therefore, that the speed of tapering and degree of recalibration of QE will depend to some extent on the near term path and strength of the euro.
- Draghi did re-iterate that the exchange rate is not a policy target but that it is very important for growth and inflation.
- However, the ECB President refused to get drawn on the level of the EUR or its momentum
- He said that there was much greater uniformity on the council about concern over the euro's rise at this meeting than there was in July.
ANZ sum up with their view:
- Much of the euro's rise has to do with the improved euro area performance, reduced political risks and emergence of reflationary trends. They are endogenous rather than exogenous factors. Admittedly, some of it has to do with the unwinding of the "Trump trade" in the US, but by no means all.
- So does that mean the degree of concern at the exchange rate's rise is less than it could otherwise be? What we do know is that the ECB is monitoring the exchange rate and won't let its monetary policy credibility be threatened by the euro's rise. That may slow QE recalibration, but it shouldn't reverse the trend improvement in the euro area's economy which has been a key driver of the euro's rise, especially as monetary conditions still remain supportive. The euro remains underpinned for now.
(bolding is mine)