EUR Collapses As ECB ‘Strawmans’ Negative Rates (Again)

EURCollapses As ECB ‘Strawmans’ NegativeRates (Again)

Given our earliercommentonthecollapseofEuropeanearnings, it is perhaps unsurprisng that the CEB is throwing everything at the problem of a strong EUR:


Of course, we await the official denial but suspect this is nothing more than attempt to gauge market response to the policy idea (just as Draghi did in May). For now, EURUSD has dumped to 1.3480, and US equities are soaring…


Deja Vu:


And the rapid response when the reaction was seen last time:

European Central Bank Governing Council Member Ewald Nowotny told CNBC on Friday that themarketsover-interpretedECBPresident Mario Draghi’scommentsonnegativedepositratesatThursday’spressconference. "Well I think the markets over-interpreted this point. Of course, there is always some kind of technical discussion about it but there is no specific plan in that direction," Nowotny said in Bratislava. "I personally think this is something where one really has to analyze very carefully the effects, side effects, psychological effects so this is not something that is of relevance in the immediate future."

But Nowotny said this was a "very sensitive issue" that would need "much more information, much more analysis than we have available at this moment." He warned it could in fact dry up the flow of credit. "This is one of the possible outcomes," he said.

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