Market: recovery of the euro in the aftermath of a session confused


© Reuters. Market: recovery of the euro in the aftermath of a session confused

After an animated meeting, the day before, is first of all characterized by a spinout of the single european currency beyond the $ 1.25 and then by the end of the session under 1.24, the euro went to the front this Friday. This afternoon, he is gaining 0.71% to 1,2466 dollar. It progresses more mesurément (+ 0,21%) against the yen and cup against the pound sterling and the swiss franc.

The session of the previous day was first marked by the governing council of the ECB and the press conference of Mario Draghi. As expected, the ECB did not announce any new decision, as it has already been divided by two, as early as January to 30 billion euros, the monthly amount that it spends on its purchases of bond assets.

Mario Draghi spoke about a lot of subjects, not without a certain confusion : the next ‘falcon’, he said that the growth of the Eurozone in the 2nd half of 2017 had exceeded expectations, which may point to a monetary tightening. It has reported to monitor the level of the euro/dollar, ‘uncertainty factor’, Mr. Draghi added, as it was to be expected, that the ECB has no mandate or policy. No more, anyway, than way to act practically on the exchange, which may be encouraged forex traders to push the euro up to 1,2537 dollar yesterday.

But on the other hand, the ECB does not rule out to increase the amount of QE, a signal ‘dove’. In addition, Mr. Draghi added that he expected interest rates to remain at their current level for an extended period of time, well beyond the term of the asset purchases,’ other signal ‘dovish’.

In addition, and as a backdrop, the search for a successor to the vice-president of the ECB, whose mandate ends this year, the Portuguese Vitor Constâncio, will start. A Spanish made part of the candidates, and if a ‘Southern European’ prevailed again, this is only an assumption, the successor to Mario Draghi, who will be elected in 2019, could for the sake of balance come from”Northern Europe’.

And maybe from Germany : in fact, never a German was chaired by the ECB, while the influence of Berlin has lately reduced within the central bank, particularly in the service macro-economic analysis underpinning monetary policy decisions. A pendulum swing back in favour of Germany is therefore not to exclude. As the current governor of the Bundesbank, Jens Weidmann, is less ‘orthodox’ than his predecessors, and therefore less likely to steer the countries of the South. While being considered to be more ‘hard’ than Mario Draghi.

Other elements play in favour of the euro : taking the exact opposite his secretary of the Treasury Steven Mnuchin, the chairman of the United States, Donald Trump, has reaffirmed since the Davos summit its support for a strong dollar, according to the traditional discourse of the executive american.

What about the current statistics ? The sequential growth of the british GDP in the 4th quarter was 1.5 per cent, compared with an advance of 1.4%.

The same figure is expected this afternoon in the United States, the consensus building 3% after 3.2% in the 3rd quarter.

EG





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