Euro trembles before the EBRD (The European Bank for Reconstruction and Development) resolutions of its’ meeting over fear it will be a setback.
Euro / dollar on Wednesday (April 20) fell as investors worried that the European Central Bank on Thursday’s remarks could hurt the euro, but some high-risk commodity currencies against the US dollar remained near the highs in the coming months, as oil prices rebounded and alleviate concerns about the global economy.
Before the ECB meeting Thursday, the euro / dollar from an intraday high of 1.1386 hit earlier in the week eased on Thursday (April 21) Asian market exchange rate to maintain the weak position above the 1.1300 line. Analysts said that although the European Central Bank will announce further easing policy is expected to be low, but the market expects the European Central Bank President Mario Draghi may leave dovish remarks will hurt the euro, which led traders to sell the euro.
19:45 GMT Thursday, the European Central Bank will announce interest rate decision 20:30 GMT Thursday Draghi (Mario Draghi) will hold a press conference. Bloomberg survey of 47 analysts showed the market generally believes that the European Central Bank this week, will not introduce new stimulus measures, attention will turn to the European Central Bank President Mario Draghi’s speech.
Oanda Dean Popplewell, chief currency strategist, said, “Investors do not want to hold out too much before euro positions.” Last month, the European Central Bank cut interest rates to reposition itself, to expand the scale and increase the monthly purchase debt on the banks of a series of low-interest loans combination punches.
Analysts pointed out that the market reaction may be different from March, but overall, Draghi hawkish tone means that no further easing of short-term, the euro expected to rise. But if Draghi holds dovish stance, fear will introduce more easing, the euro will be under pressure selling.
AUD / USD from earlier intraday created by a 10-month high of 0.7830 was down, but the late hovering near $ 0.7800 level. Canadian dollar against the US dollar rose to nine-month high 1.2590. Analysts said the rebound in oil prices and confidence in China’s economic situation further increased so commodity currencies benefit. Chinese economy in recent weeks released data strong.
US dollar against the safe-haven yen rose to two-week high 109.88. US dollar / Swiss franc also rose more than 1%, more than three weeks to the highest of 0.9733. The Swiss franc is often regarded as a safe haven investment. Shahab Jalinoos, global head of currency strategist at Credit Suisse, said the US bond yields over comparable European bonds and Japanese bond yields higher because the dollar is rising against the yen and the euro. The benchmark 10-year US Treasury yields hit three weeks maximum 1.859%.
US Commodity Futures Trading Commission (CFTC) position data showed last week, hedge funds and other large speculators betting on short euro holdings to near the weakest since June 2014 level. Peng Bozhuan article said, amid speculation the European Central Bank policy meeting on Thursday, President Mario Draghi will imply a further easing of policy space.
The ECB will make the market setback?
Given the probability of the ECB Governing Council in March disclosed a series of stimulus measures taken in April meeting key actions substantially reduced to zero. Of monetary policy as well as the limited nature of the question the next question for the European Central Bank action, likely to dominate President Mario Draghi’s press conference.
Canada’s Scotiabank (Bank of Nova), chief currency strategist in Toronto Shaun Osborne, said: “The euro looks a bit fragile, before the ECB meeting some speculative selling that Draghi will not appear on the policy level, there any action, but it may make some dovish comments, and may reserve rate cut may be again. ”
DailyFX currency strategist Christopher Vecchio said the focus will be on Thursday Draghi’s press conference, in particular, Q & A, will result in fluctuations in the euro on Thursday intensified. Draghi said the central bank and other officials last policy is not directed against foreign currency exchange rate , the euro rebounded to a breathing space.
BK Asset Management chief analyst Kathy Lien said that although the meeting there will be more tightening or ease the introduction of action, but if Draghi hinted at more rate cuts next aspect to spending some effort, the euro / dollar could fall to 1.1100 line but if he has expressed the need for more time to observe easing the economic impact of the euro / dollar could further upstream towards 1.1400.
Fidelity International (Fidelity) Analysts Dierk Brandenburg in an interview on Thursday the results of the meeting of the European Central Bank is unlikely to have a substantial impact on the euro, central banks have looked into the “intermission.” According to Fidelity website, the company’s assets under management as of September 30 at $ 258.4 billion.
However, there are market rumors Draghi willing to open the printer, the “helicopter money” to promote local economic recovery, but it remains to be seen whether in the EU internal legal adoption. However, if the “Super Mario ” reference to this concept at a press conference, the foreign exchange market or the outbreak of “Earthquake.”
FXStreet Valeria Bednarik, the chief analyst pointed out that the ECB is concerned, but the market does not usually react to the wording of the facts. Such as Super Mario back in a news conference this concept currency may suffer the short-term impact of the earthquake.
Andrew Bosomworth Pimco portfolio manager said the ECB is unlikely to be “helicopter money” in the short term as a serious policy option.
SEB Bank (SEB) believes that the European Central Bank on Thursday will not discuss the “helicopter money” loose issues.
SEB Bank said, “We do not think the ECB will discuss ‘helicopter money’ type of loose way because a number of members felt that this subject to legal restrictions from the European Central Bank a recent action, the EBRD expected macro or report showed the eurozone to reach the medium-term inflation target. “