ECB seems pleased with market interpretation of the forward guidance – TDS

According to analysts from TDS, at today meeting, the European Central Bank, reiterated all of its forward guidance, and in general seems to be happy with the market’s interpretation of the June statement.

Key Quotes:  

“Today’s ECB decision was largely the summertime placeholder that we were looking for. The initial press release was unchanged, although we did note an interesting tidbit, where the foreign language translations included a note at the bottom saying that the English-language version is that one that contains the exact text approved by the Governing Council.”

“The ECB noted that the most recent economic indicators have stabilized, as opposed to having weakened into the June meeting, but the balance of risks around growth was still considered to be “broadly balanced.“

“He said that the ECB “took note” of the meeting (Juncker-Trump), and thinks that in general it was a good sign. But that it’s difficult to go beyond that at the moment as they still don’t have any more substance. He also pushed back on Trump’s comments about the EUR being artificially weak, noting that on a trade-weighted basis the EUR has actually appreciated over the last 12-18 months.”

“Draghi also seems to be pleased with how markets interpreted the forward guidance in June, noting that surveys, market commentary, and market pricing have all reflected the ECB’s guidance, and that they therefore have deemed it to be “very effective.””

“So overall there really wasn’t much to take away from today’s meeting, and we’ll be looking to the new forecasts in September for the next significant messaging from the ECB.”

“The July ECB meeting was largely a non-event for FX markets. We think EURUSD is likely to remain rooted in familiar ranges for now as the ability for potential catalyst for the EUR to drive a breakout- in either direction – seems limited. With an eye on next week’s heavy data and event risk calendar, we look
to external factors to drive any fluctuations in the pair for the foreseeable future.”