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3 Sep 2015
ECB QE, rally oil or Fed not hiking main driver? - TDS
FXStreet (Guatemala) - Richard Kelly, Head of Global Strategy at TD Securities noted the dovishness of today's announcements of the ECB, and puts things into context in respect to the next driver for EUR/USD.
Key Quotes:
"There is a wider margin of error around most financial forecasts these days, but given everything we expect, it now seems the ECB will be inclined to deliver more this year. We still expect the Fed disappointing and not raising rates in September to be the driving feature of more market dynamics.
As a result, we are still more wary that the Fed not hiking in September will be a bigger driver of EUR/USD squeezing higher than the threat of the ECB doing more. This threat does, however, at least remove the worries we had that EURUSD could test as high as 1.20 if the ECB was not this forceful right away. But even in that case, the ECB’s reaction would likely be more driven by the likely rally of oil on the back of delayed Fed tightening. So for now, assume the ECB will deliver more QE, but view this as limiting the risk of the market pushing EUR higher than actually driving us significantly lower."
Key Quotes:
"There is a wider margin of error around most financial forecasts these days, but given everything we expect, it now seems the ECB will be inclined to deliver more this year. We still expect the Fed disappointing and not raising rates in September to be the driving feature of more market dynamics.
As a result, we are still more wary that the Fed not hiking in September will be a bigger driver of EUR/USD squeezing higher than the threat of the ECB doing more. This threat does, however, at least remove the worries we had that EURUSD could test as high as 1.20 if the ECB was not this forceful right away. But even in that case, the ECB’s reaction would likely be more driven by the likely rally of oil on the back of delayed Fed tightening. So for now, assume the ECB will deliver more QE, but view this as limiting the risk of the market pushing EUR higher than actually driving us significantly lower."