EUR/USD almost flat after ECB gets a new Vice President nomination on “consensus”

Analysis General

Published: 2/19/2018 3:41:00 PM
News


EUR/USD closed the European session around 1.2407, almost unchanged (+0.02%) after the ECB got a new Vice President on consensus nomination in the form of De Guindos, the current Spanish economy/finance minister.

As par De Guindos- “Steps need to be taken to deepen economic and monetary union and having been a government minister does not limit the independence of the ECB. Independence of ECB guaranteed by its mandate. He is neither a hawk nor a dove, but a pragmatic person”.

The market is assuming that De Guindos appointment has cleared the way for a German ECB´s president next year, when Draghi’s term will end and in that scenario, Weidmann, the current BUBA chief, may be the next president, who is known as a hawk, but now increasingly positioning himself as an owl (centrist) for the vital post.

For the EUR, there were no important economic data on Monday, but  the current account for December flashed subdued at 29.9B against an estimate of 30.5B (prior: 35.0B). Basically, EUR weakness on Monday was a function of dollar recovery after Japanese government said that it is watching Yen move with “greater” sense of concern and is ready to act when actually needed.

Also, overall US economic data was positive for the  USD on Friday along with US DOJ (Department of Justice) indictment report for the alleged Russian disinformation campaign.

Earlier, EUR came under some pressure after reports that Ireland has withdrawn its candidacy for ECB´s vice president  and will support the Finance Minister (FM) of Spain as a “consensus” candidate. Incidentally, FM of Spain is not an economist and thus the market is concerned that likely appointment of a non-economist political figure may tarnish the image of ECB’s independence.

There is a strong buzz on the street that appointment of someone from Southern Europe like Spain could be strategic as someone from Germany is poised to take Draghi’s role next year.

Apart from politics regarding ECB’s VP post, EUR is also under pressure on news that Latvian central bank Governor Rimsevics, a member of the ECB’s governing council, was detained by the anti-graft bureau in a flurry of actions by officials, but later he was released on bail.

Overall, EZ economy is firing all the cylinders and performing well. Thus it now seems that ECB is not concerned about the strength of the currency and an eventual policy normalization. Over the last few months, ECB is increasingly shifting its focus from QE tapering to rate hikes.

Technically, EURUSD now needs to stay above 1.2350 area; otherwise, 1.2213-1.2200 and 1.2191-1.2052 may be visible soon. For any bounce back EURUSD has to sustain above the 1.2495-1.2560 zone towards 1.2595-1.2625 and the 1.2762-1.2881 area in the coming days.



Tag: General
Source: FXSTREET
Views: 191 times

5 Votes

Discover more...

TOP STORIES LAST 24H

Comments