Towards the end of Mario Draghi’s press conference he left the door open to setting a negative deposit rate, a move that would scare money out of the euro zone.
The euro certainly got scared and lost around 100 pips instantly, falling to 1.3080. The move continues.
More: Are negative interest rates really possible? Yes they are
Draghi said:
ECB has an open mind on negative deposit rate
and:
There are possible consequences to deposit rate cut but we are prepared to act to mitigate these … the ECB is technically ready to cut deposit rates
This is the “nuclear option” mentioned in the ECB preview. While the most extreme scenario of setting negative deposit rate didn’t happen, scenario No. 3, where Draghi hints about a negative rate, certainly happened.
By saying that the ECB is ready to mitigate the negative effects of such a negative rate, the hint and the threats are much thicker than just not ruling out this option.
For more about the euro, see the EUR/USD forecast. Here is a live chart of EUR/USD:
Get the 5 most predictable currency pairs
20 Comments
Pingback: EURUSD higher on ECB rate decision | Forex Crunch
Pingback: ECB Press Conference Live Blog – Draghi Explains Historic Cut | Forex Crunch
Pingback: The EUR is lower. Are negative interest rates really possible? | Forex Crunch
Pingback: Are negative interest rates really possible? Yes is the answer | Beginning Forex
Pingback: Draghi Open to “Nuclear Option” – a Negative Deposit Rate – EUR/USD Crashes |
Pingback: Gold Price Forecast and Silver Price Outlook Thursday May 2nd 2013 | Trading NRG
Pingback: Gold Price Forecast and Silver Price Outlook Friday May 3rd 2013 | Trading NRG
Pingback: EUR/USD May 3 – Euro Drops as ECB Cuts Rates to 0.50% | Forex Crunch
Pingback: Non-Farm Payrolls: +165K, +155K Expected | Forex Crunch
Pingback: Non-Farm Payrolls: +165K, +155K Expected | Forex Crunch | Forex
Pingback: EUR/USD Outlook May 6-10 | Forex Crunch | Forex
Pingback: EUR/USD: Trading the German Factory Orders | Forex Crunch
Pingback: EUR/USD May 6 – Steady after | Forex Crunch
Pingback: EUR/USD May 7 – Under Pressure as Draghi Mulls Further Cuts | Forex Crunch
Pingback: AUD under pressure, Slovenia could pressure EUR | Forex Crunch
Pingback: EUR/USD Outlook May 6-10 | Forex Crunch
Pingback: EUR/USD May 6 – Settles Down After ECB Excitement | Forex Crunch | Forex
Pingback: EUR/USD Forecast May 13-17 | Forex Crunch | Forex
Pingback: EUR/USD Forecast May 13-17 | Forex Crunch
Pingback: EUR/USD: Trading the German Preliminary GDP | Forex Crunch