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Scaling back Euro downside expectations – Goldman Sachs

FXStreet (Delhi) – Robin Brooks, Research Analyst at Goldman Sachs, suggests that their conviction that the ECB is wholeheartedly pursuing reflation policies is down, and the research house is scaling back their expectation for Euro downside as a result.

Key Quotes

“Monetary policy at the zero lower bound is above all an expectations game, where added stimulus, when it is undertaken, should be large and impressive.”

“This matters because unconventional policies are, realistically, quite controversial, such that incremental easing sends a mixed message, one of reluctance and doubt.”

“Since the start of QQE, the BoJ has committed to “all in” unconventional stimulus, while last week’s “calibration” from the ECB sent a mixed message to the markets.”

“We revise our forecast for EUR/$ to 1.07, 1.05 and 1.00 in 3, 6 and 12 months and our forecasts for EUR/GBP and EUR/CHF have also been revised up.”

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