ECB Quick Analysis: Why Lagarde s short-term fix is lose-lose for the euro fxstreet.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from fxstreet.com Daily Mail and Mail on Sunday newspapers.
1/21/2021 2:05:54 PM GMT
The ECB has opened the door to squeezing bond buys if conditions improve.
President Lagarde s mentions of the exchange rate remain muted.
The euro benefits from Lagarde s words that the downside risks are less pronounced.
Subtle changes to language can be meaningful to EUR/USD traders – the European Central Bank has left its interest rates unchanged but seems more upbeat, allowing EUR/USD to rise.
Here are three changes that have pushed the common currency higher and may continue doing so.
1) Perhaps not all the support is necessary
In the statement, the Frankfurt-based institution probably conceded to German hawks, stating that it might not use the full envelope of its bond-buying scheme. If conditions improve, it would refrain from deploying the full envelope of the Pandemic Emergency Purchasing Program.
ECB bond buys increase fiscal space for German government Berlin seizes opportunity with record new borrowing (Adds details, background)
BERLIN, Dec 15 (Reuters) - Germany earned more than 7 billion euros ($8.51 billion) from issuing new bonds this year as negative interest yields pushed down Berlin’s overall debt servicing costs to record lows, a finance ministry document showed on Tuesday.
The windfall is mainly due to “historically very low interest rates”, Deputy Finance Minister Bettina Hagedorn wrote in a letter to opposition lawmaker Fabio De Masi following a parliamentary request.
The average yield on new German bonds issued until end of November was -0.56 percent, resulting in revenues of 7.07 billion euros, according to the finance ministry document.