ECB Meeting Disclosures Do Little to Disturb the Markets

Alan Penny

21 November 2019

2 min read

European Central Bank

  • The ECB meeting notes from October released today
  • The European Central Bank is expected to continue buying assets
  • ECB does not expect a recession in the EU

According to the latest news, the ECB does not expect a recession in the EU although the economy is growing less than hoped. The current inflation rate is around 1% and the ECB’s monetary stimulus will allow it to grow. It is also important to mention that several ECB officials said that monetary policy has yet to reach its limits. The EUR/USD is trading today around 1.1075, the US dollar is losing some of its value in a risk-averse environment, amid uncertainty surrounding trade negotiations between the US and China. 

ECB does not expect a recession in the EU

Investors did not show a huge reaction to the release of the ECB meeting data, one of the main events this trading week. The latest economic data from the EU failed to impress. Both the EU and German GDP expanded modestly in the third quarter of the year but this is not enough according to the analysts. 

This situation confirms speculation that the ECB won’t hike rates until 2020.

Signs of a further economic slowdown in the Union are keeping the upside limited for the EUR for now. The European Central bank left its monetary policy unchanged at its latest meeting and the economic slowdown continues entering Q4. The inflation in the EU is still below expectations and this situation confirms speculation that the ECB won’t hike rates until 2020.

Chinese officials said that they remain pessimistic about a trade deal with the United States and the trade war concerns still represent the negative sentiment that rules the financial world. US President Trump recently said that he would “just raise tariffs” if the US does not make a deal with China. He also said that “China is going to have to make a deal.”

Economic uncertainty remains amidst trade wars

Trade war headlines are creating uncertainty and this has a negative influence on the financial markets.

The ECB’s chief economist Lane said this Wednesday that he sees the Eurozone’s economic recovering in the next year or two. The new European Central Bank president Christine Lagarde will have a speech on Friday at 8:00 GMT and there’s a chance she’ll announce that the EU needs a further immediate monetary policy shift.

EUR/USD is trading in a tight range this Wednesday and the pair is on track to post a small daily profit after an overall quiet trading session.

Written By
Alan Penny

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