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28 Feb 2014
Flash: ECB points to focus on - Scotiabank
FXStreet (Barcelona) - Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank looks into the ECB coming up and points to focus upon.
Key Quotes
"1. Headline inflation has stabilized just below 1.0% and appears to be above expectations, providing some credibility to the ‘wait‐and‐see’ mode the ECB has entered."
"2. Core inflation accelerated back to 1.0%y/y, which is encouraging."
"3. The ECB forecasts are already in line with market and the EC’s official forecasts, suggesting that the bar for a significant downgrade to their inflation forecast next week is likely relatively high. See bottom chart—a repeat from yesterday."
"4. President Draghi highlighted that the Q4 GDP print would be important in the ECB’s analysis. This came in above expectations at 0.3%q/q and 0.5%y/y and trending higher, which should
prove reassuring to the ECB."
"5. Emerging market pressures are constant, and in Europe are arguably worse than at the beginning of February, however so far the major central banks are only watching closely and not
setting policy in accordance with it."
"The stabilization in disinflationary pressures is likely to ease some of the ECB’s concerns and support EUR into next week’s meeting. In other fundamental data, strong German retail sales were offset by soft consumer spending and PPI data from France."
"="">EUR/USD short‐term technicals: bullish—all studies are in buy territory and upward momentum is strong. EUR appears poised to make a near‐term test of the December 27th high of 1.3893. For short‐term traders we favour long EUR positions; however have not abandoned our medium term EUR bear call; but it is still too early to position for this."
Key Quotes
"1. Headline inflation has stabilized just below 1.0% and appears to be above expectations, providing some credibility to the ‘wait‐and‐see’ mode the ECB has entered."
"2. Core inflation accelerated back to 1.0%y/y, which is encouraging."
"3. The ECB forecasts are already in line with market and the EC’s official forecasts, suggesting that the bar for a significant downgrade to their inflation forecast next week is likely relatively high. See bottom chart—a repeat from yesterday."
"4. President Draghi highlighted that the Q4 GDP print would be important in the ECB’s analysis. This came in above expectations at 0.3%q/q and 0.5%y/y and trending higher, which should
prove reassuring to the ECB."
"5. Emerging market pressures are constant, and in Europe are arguably worse than at the beginning of February, however so far the major central banks are only watching closely and not
setting policy in accordance with it."
"The stabilization in disinflationary pressures is likely to ease some of the ECB’s concerns and support EUR into next week’s meeting. In other fundamental data, strong German retail sales were offset by soft consumer spending and PPI data from France."
"="">EUR/USD short‐term technicals: bullish—all studies are in buy territory and upward momentum is strong. EUR appears poised to make a near‐term test of the December 27th high of 1.3893. For short‐term traders we favour long EUR positions; however have not abandoned our medium term EUR bear call; but it is still too early to position for this."