The global economy has been weakening for more than a year since the trade war started and the Eurozone economy is suffering immensely. German manufacturing has been in deep contraction for many months and the effects of it are spilling into other sectors of the economy. Inflation has weakened considerably in the Eurozone and the 0.2% decline in German CPI inflation today  confirmed that.

The European Central Bank (ECB) has suggested easing the monetary policy further and anaylysts have been prediction the reintroduction of the Quantitative Easing (QE) programme, hence the downtrend in the Euro pairs recently. But now we hear ECB member Knot play those expectations down. Here are his comments:

• No ‘value added’ in ECB launching package of measures
• Would be reluctant to back peitring of deposit rates
• Market expectations for September are ‘overdone’
• Might be minor revisions to September forecasts
• ECB should keep powder dry in case of new shock

The Euro jumped 30 pips higher on these comments but the it has given back all the gains now. Knot is not the main guy at the ECB, so these are just his opinions. Mario Draghi has looked very worried in recent meetings and I am sure we will get some important revisions from the ECB in September.