Explain the ECB Governing Council! – ECB and the EU in the spotlight –
Recently, around methere has been an increasing number of people trading EUR/JPY and GBP/JPYit seems. Until now, people who mainly scalped or day traded USD/JPY have beentrading euros and pounds to seek volatility due to the low volatility of USD/JPYI hear.
In the midst of this, the ECB Council meeting took place.
I have summarized the results of the meeting and points to watch going forward.
↓↓↓ For the pre-meeting expectations and strategies, please see the article below ↓↓↓
September ECB Council expectations and strategies
◎ECB Council results
No change in monetary policy! (as expected)
The statements and press conference content are as follows!
Mario Draghi, President of the European Central Bank (ECB)
“The ECB stands ready to adjust all tools if necessary.”
“The underlying strength of the economy continues to support confidence.”
“Recent indicators confirm ongoing growth.”
“GDP outlook2018 from 2.1% to 2.0%,19 from 1.9% to 1.8%
“Growth risks are broadly balanced.”
“Inflation outlook risks are fading”
“Protectionism and emerging market risks have become more prominent.”
“Core inflation is expected to rise towards the end of the year.”
“Inflation forecasts for 2018, 2019 and 2020
“Euro area economic growth will remain above potential for some time.”
“Confident inflation will converge to the target.”
“No discussion of Operation Twist.”
“Spillovers from Turkey and Argentina are not expected to be persistent”
“Financial market impact of policy changes is a risk.”
“Protectionism is a major source of uncertainty.”
As expected, GDP outlook was revised downward.However, other points sounded more hawkish than expected.They sounded more hawkish than I anticipated.>
1)Downward revision of GDP outlook (consensus)
The GDP outlook downward revision was as expected. While not as large as feared, this is positive. Also, there were no negative statements about the outlook going forward.
2)Inflation outlook
Inflation forecast held at 1.7%, with risks to the downside receding — a positive message!
3)External factors
They touched on risks from emerging markets such as Turkey and Argentina, but there were no signs that a currency crisis in emerging markets would affect the euro. Positive content as well.
Overall, a positive toneand theEUR rose as Draghi’s press conference began!
EUR/USD Five-minute chart
◎ Points to watch going forward
1)External factors
In this meeting, external factors were not seen as having an impact. However, the relationship between Turkey and the United States continues to deteriorate. If the Turkish lira keeps falling, it is likely to affect Spain and Italy. Also, countries with fiscal problems like Turkey, Italy, Greece, and Spain face refugee issues.
2)Progress in Brexit negotiations
Brexit negotiation deadlines are approaching, though not addressed at this meeting. Depending on the talks, the UK and European countries could be affected, potentially impacting the economy. Watch future negotiations closely.
3)Internal factors
Italian budget proposals, rating, Greek fiscal issues, and the rise of populist parties, as well as external factors, require attention. QE ending within the year is a given. For rate hikes next year, much will depend on future developments. The reason for delaying rate hikes beyond next autumn is perhaps the upcoming European Parliament elections. Next year will see many EU/ECB leadership changes. Draghi’s term ends in autumn. With many geopolitical risks and events on the horizon, circumstances will change moment by moment. This year and next, Europe will demand close attention.
