Danske Research discusses its review for today's ECB policy decision.
"The ECB’s decision today to extend the forward guidance to ‘at present levels at least through H1 2020’ were on the dovish side of our expectations, but significantly more hawkish than markets expected. However, the price action after the press conference suggest that markets don’t expect Draghi to have been dovish enough. TLTRO3 modalities came in as broadly expected," Danske notes.
"EUR rose across the space of G10 currencies today as the dovish market expectations were left gravely disappointed. The lack of clear hints that easing, either in terms of rate cuts or QE, is coming means that the market will find a hard time selling EUR on the expectation of easing unless ECB officials start addressing this in public. After a week where Fed and ECB monetary policy has been in focus the market is now left with a Fed ready to cut rates and an ECB which has only started discussing how it would respond if the economy deteriorated even further. The monetary policy divergence supports our 6M forecast for EUR/USD of 1.15," Danske adds.