Here's why the comments from the ECB's Rehn last week were so significant
ICYMI last week's comments from Rehn, here:
Bank of Finland governor and therefore also a member of the ECB's rate-setting committee, Olli Rehn was writing in the WSJ.
Snippet via UBS, the bank thinks Rehn's words were significant:
- rightly seen as euro negative, in the sense that he expresses a very clear view that the September package will need to be a big one
- specifically argues for 'substantial' bond purchases
- and that it was important to beat market expectations
Their view is that:
- EUR will repeatedly get pushed lower ahead of 12 September
- only after that would the euro have any chance to move substantially higher, possibly once Draghi's departure coincides with the launch of meaningful German fiscal stimulus
While unrelated to Rehn I bolded that German stimulus bit ….. don't dismiss the likelihood of this folks.