5 Mar 2015
Eurozone negative yields driving EUR lower – BTMU
FXStreet (Barcelona) - With a large part of Eurozone debt market yields swimming in negative territory and Draghi expected to drive yields further lower by stressing that ECB may buy “at any price”, Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views risks for euro are tilted to the downside.
Key Quotes
“That advance for the dollar by default is of course in part due to the ECB. The QE program coupled with the negative deposit rate is unique and is likely playing a key role driving the euro lower”
“After Fed QE2 and QE3i and QE3ii the US dollar rallied, at least initially as the announcement effect faded. This is not the case for the euro and the fact that such a large portion of the euro-zone debt market is now trading with a negative yield is playing a role.”
“Today, President Draghi will hold his monetary policy press conference and perhaps provide some details for the financial markets – the obvious one being when will the QE buying actually start? Also reporters may try and gauge how strict the ECB is on its self-imposed limits of buying specific issues and from each sovereign.”
“We sense one theme today may centre around questions over the ECB’s ability to meet its goal of buying something in the region of EUR 850bn worth of sovereign debt.”
“Expect Draghi to be very forceful in stressing the determination of the ECB to meet its goal – that is likely to give an impression to the market that the ECB may buy “at any price” and drive yields further lower, of course dragging the euro down too.”
Key Quotes
“That advance for the dollar by default is of course in part due to the ECB. The QE program coupled with the negative deposit rate is unique and is likely playing a key role driving the euro lower”
“After Fed QE2 and QE3i and QE3ii the US dollar rallied, at least initially as the announcement effect faded. This is not the case for the euro and the fact that such a large portion of the euro-zone debt market is now trading with a negative yield is playing a role.”
“Today, President Draghi will hold his monetary policy press conference and perhaps provide some details for the financial markets – the obvious one being when will the QE buying actually start? Also reporters may try and gauge how strict the ECB is on its self-imposed limits of buying specific issues and from each sovereign.”
“We sense one theme today may centre around questions over the ECB’s ability to meet its goal of buying something in the region of EUR 850bn worth of sovereign debt.”
“Expect Draghi to be very forceful in stressing the determination of the ECB to meet its goal – that is likely to give an impression to the market that the ECB may buy “at any price” and drive yields further lower, of course dragging the euro down too.”