8 May 2014
Euro loses shine as Draghi says 'comfortable with acting next time'
FXStreet (Córdoba) - Draghi takes the wind out of euro's sails by hinting at June action. He said the ECB is comfortable with acting "next time", sending the shared currency to fresh lows versus most competitors.
However, many analysts are doubting the ECB will actually deliver next month as the central bank has let the market down this path in the past. Nevertheless, his words were enough to halt EUR short term rally.
The EUR/USD lost more than 100 pips in a matter of minutes and dropped from a 2 ½-year high of 1.3992 to a daily low of 1.3878. The EUR/GBP fell to a nearly 3-month low of 0.8187, while the EUR/JPY hit a 10-day low of 141.09.
"Reading between the lines, it appears that even if Draghi himself wanted to ease policy, he is institutionally constrained by the need for consensus", said Marc Chandler, analyst at BBH. "Several of the creditor countries, led by Germany, are more worried about interest rates being too low for too long then the lowflation. Note that as the euro area expands, the ECB is going to adopt a rotating voting basis, and this will add a new wrinkle into ECB meetings next year".
However, many analysts are doubting the ECB will actually deliver next month as the central bank has let the market down this path in the past. Nevertheless, his words were enough to halt EUR short term rally.
The EUR/USD lost more than 100 pips in a matter of minutes and dropped from a 2 ½-year high of 1.3992 to a daily low of 1.3878. The EUR/GBP fell to a nearly 3-month low of 0.8187, while the EUR/JPY hit a 10-day low of 141.09.
"Reading between the lines, it appears that even if Draghi himself wanted to ease policy, he is institutionally constrained by the need for consensus", said Marc Chandler, analyst at BBH. "Several of the creditor countries, led by Germany, are more worried about interest rates being too low for too long then the lowflation. Note that as the euro area expands, the ECB is going to adopt a rotating voting basis, and this will add a new wrinkle into ECB meetings next year".