ECB: Market focused on guidance – Westpac

In view of analysts at Westpac, the ECB Governing Council is not overly concerned about the current level of the currency, but a further jolt higher is certainly not desired.

Key Quotes

“President Draghi put off speaking on the topic of monetary policy at the Jackson Hole Symposium, instead choosing to focus on the long-term concerns of confidence and productivity. Before and after that engagement, the Euro continued to rally past USD1.20.”

“Come September, the market will be focused on guidance on a 2018 taper and forecast revisions. To hold off a higher Euro, the Council needs to emphasise that the taper process will be slow and that rates won't rise until well after it is completed. Note it is not a given that hard detail on the taper will be provided in September; the Council may wait until October or December.”