Mario Draghi continued his testimony. After his initial remarks were only a repeat of previous news that allowed the euro to recover, he did manage to say something a bit new.
The president of the ECB said that if volatility in markets creates unwanted tightening (worse credit conditions) and the inflation outlook worsens, they will be ready to act.
So, if his introductory statement allowed the euro to rise in range, these fresh ones allow the common currency to slide back down in range. EUR/USD is slipping back toward 1.1150, where it traded beforehand.
He also said that QE could be extended beyond September 2016, its projected end date. This in itself is not new, as the termination of the program is dependent on achieving the Frankfurt based institute’s inflation objective of “2% or a bit belowâ€. Inflation currently stands at 0.1% y/y or 0.9% in core inflation.
All in all, Draghi refrained from rocking the boat too much in this appearance, but he may certainly do so later on. The next ECB meeting is in mid October.
In our latest podcast we explain why the dollar defies the doves
Follow us on Sticher.
