Draghi’s comments increased likelihood of ECB’s tapering – Lloyds Bank

ECB President Draghi’s remarks yesterday led to a rally in the euro as they increased the likelihood of tapering in asset purchase programme of ECB, explains the research team at Lloyds Bank.

Key quotes

“EUR/USD reached a 2017 high of 1.1379, while GBP/EUR fell to a low of 1.1262. Benchmark 10-year US Treasury yields have risen back above 2.20% for the first time in two weeks. Draghi’s comments were interpreted as increasing the likelihood that the ECB may start to wind down its asset purchases next year, although he was careful to say that such policy adjustments should be “gradual”.”

“He speaks again today and it will be interesting to see if he repeats his comments today. As noted above, BoE Governor Carney also speaks following the announcement yesterday that the countercyclical buffer will be increased to rein in lending growth.”