Market Views For 2016 - page 20
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Euro To Dollar 2016 Exchange Rate Outlook: Single Currency Tumbles 1.3% On Dovish Draghi
The initial surge seen by the Euro to US Dollar (EUR USD) exchange rate following the latest ECB meeting quickly turned to a slump after Mario Draghi’s press conference.
Mario Draghi commented today that QE could be extended past the new deadline of December 2017 and that forecasts made for inflation of 1.7% by the end of 2019 was not close enough to the ECB’s target rate of just under 2%.
Taken together, these comments indicate that European Central Bank policy is likely to remain loose for some time to come, with the first signs of monetary tightening potentially not appearing until 2020.
EUR/USD initially surged in the wake of the ECB’s policy decision, with financial markets encouraged by policymaker’s outlook on monetary policy.
Although the ECB opted to extend its quantitative easing program by nine months – higher than many forecasts – it also announced a modest tapering of the scheme, with monthly asset purchases down from 80 billion to 60 billion.
This encouraged investors, although the potential for further Euro weakness remains ahead of ECB President Mario Draghi’s press conference.
The approach of an eagerly-awaited European Central Bank (ECB) monetary policy meeting is keeping the Euro US Dollar exchange rate firm today, despite expectations of extended stimulus measures.
Despite the potential for an extension to the current quantitative easing programme from the European Central Bank, the Euro to US Dollar exchange rate is advancing.
Markets have already positioned themselves short on the Euro, with other investors buying EUR from its lows on the view that policy easing had been overly priced in.
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Euro Rallies Against US Dollar As Trump’s China Talk Alarms Foreign Currency Investors
The Euro has made major gains against the US Dollar during trading today, thanks to a deterioration in US-China outlooks
The Euro’s latest appreciation against the US Dollar is mainly due to US developments, which have concerned the nation’s future relationship with China. In another blow to international relations, President-Elect Trump has weakened the US Dollar by hinting that he may not adhere to previous policy on treating China and Taiwan as the same entity.
Ahead of the final Fed meeting of the year the Euro has returned to an uptrend against the US Dollar, with investors having already discounted the impact of an imminent interest rate hike.
A much stronger than expected University of Michigan Confidence Index helped to bolster the appeal of the US Dollar (USD) ahead of the weekend, with sentiment picking up from 93.8 to 98.0 in December.
Given the more dovish nature of comments from European Central Bank (ECB) President Mario Draghi, which suggested that monetary policy will remain loose for the foreseeable future, demand for the Euro (EUR) as also weakened.
As a result the Euro to US Dollar (EUR USD) exchange rate slumped sharply, particularly in the wake of a disappointing narrowing of the German trade surplus for October.
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Reuters: Italy prepared to pump 15 billion euros into ailing banks - sources
Monte dei Paschi has until the end of this month to raise 5 billion euros. If not the bank faces a potential wind down by the ECB
- That private rescue plan is widely expected to fail
- So, Italy's government is ready to pump 15 billion euros into Monte dei Paschi di Siena & other ailing banks
- The government would make the 15 billion euros available in a decree on December 22, La Repubblica newspaper said on Thursday
The report is here for more