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EUR hurt by Draghi – Danske Bank

FXStreet (Edinburgh) - Chief Analyst Lars Christensen at Danske Bank assessed the recent speech by ECB’s Mario Draghi at the Jackson Hole Symposium.

Key Quotes

“Over the weekend ECB-chief Mario Draghi spoke at the Kansas City Fed’s annual symposium in Jackson Hole. Draghi among other things said:”

“The Governing Council will acknowledge these developments and within its mandate will use all the available instruments needed to ensure price stability over the medium term”.

“Draghi thereby hinted that the ECB could take further action soon to curb deflationary pressures in the euro-zone”.

“In regard to Draghi’s comments it is particularly notable that he diverged from the pre-prepared speech by highlighting that 5-year/5-year inflation expectations have dropped below 2% - indicating a need for monetary easing”.

“Inflation expectations in the euro-zone have declined strongly recently”.

“Despite Draghi’s dovish comments, there has not been a major reaction in the global markets and it seems like fears about the situation in Ukraine still weigh on risk appetite”.

“Hence, this morning Asian stock markets mostly trade lower. The US stock markets were also trading lower on Friday”.

“That said, Draghi’s comments helped send the EUR to the weakest level against the USD in 11 months this morning”.

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