As the ECB Economic Bulletin Suggests, the Euro Should Remain Bearish for Months to Come

Posted Thursday, August 8, 2019 by
Skerdian Meta • 1 min read

The European Central Bank (ECB) released the monthly economic bulletin which is the first after Thursday’s meeting last week where we heard some really dovish remarks. The bulletin reinforced those dovish biases that we heard last week and it seems like the ECB will introduce another stimulus package. Here are the main comments:

  • Prolonged uncertainty is dampening economic sentiment
  • Notably in the manufacturing sector
  • Drop in Q2 global services output PMI raises risk of more broad-based deterioration in the global growth outlook
  • Data and survey information point to somewhat weaker Eurozone growth in the coming quarters
  • ECB is examining future policy options via reinforcing the forward guidance, rate tiering and potential restart of QE

They see the tough spot manufacturing is in at the moment, especially in Germany where this sector is in recession. The economy of the Eurozone is pretty weak and the ECB expects it to get even weaker. They mentioned the potential start of another QE (quantitative easing) programme which should be bearish for the Euro for months if not years to come.

But, the big decline will come when they announce a start date. So, we must keep an ear stuck to the ECB for any such comments in the coming weeks guys, not to miss the big decline when it comes.

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