세계경제 트렌드와 MARKET CRASH 2015

Jul 28, 2014

thefinancialist: 드라기는유로화 하락을 장기간 멈출 수는 없을것

원문: http://www.thefinancialist.com/draghi-cant-hold-the-euro-down-much-longer/

Draghi Can’t Hold the Euro Down Much Longer

draghi ecb euro
Technically speaking, the European Central Bank did nothing at its monthly meeting last week. Despite plenty of discussion that May might finally have been the month for fresh monetary stimuluspolicymakers not only left interest rates where they were, they also failed to offer up a quantitative easing program that many had hoped for. Instead, ECB President Mario Draghi did what he’s become quite expert at doing—he offered soothing assurances of preparedness. Such an approach has served him quite well to this point, but talk alone is unlikely to keep the markets at bay for much longer. Particularly where the euro is concerned: Cyclical indicators appear robust, the current account surplus is near a record high, and foreign investors are pouring money into European stocks. By all rights, the currency should be strengthening – and if the ECB continues to punt, it’s likely to start doing just that.

What, exactly, did Draghi say? He announced that the central bank’s Governing Council is “unanimous in its commitment” to use unconventional monetary tools such as QE to nudge inflation higher from 0.7 percent levels and toward the bank’s 2 percent target. Not only that, he also offered a time frame: maybe as soon as next month. The statement revealed a new sense of urgency from an institution that has been wary of taking action since its last rate cut in November 2013, despite stubbornly high unemployment and persistently low inflation. But whether he realized it or not, Draghi – the man who singlehandedly calmed panicked investors in 2012 by saying the central bank would do “whatever it takes” to keep the monetary union together – might have played his last remaining card in his attempts to keep the euro trading within a relatively tight range against the dollar.

Credit Suisse still doesn’t expect a quantitative easing announcement, but analysts say a further rate cut potentially combined with further liquidity announcements cannot be excluded. What could cause the ECB to act? Inflation. Or, more precisely, a lack thereof. Annual inflation rates haven’t topped 1 percent since September 2013, which suggests weak consumer demand, even if Draghi is correct that there is little imminent danger of deflation. But Credit Suisse says the central bank is likely to act if it is forced in June to revise its 2016 inflation forecast down from 1.5 percent.

One thing that might bring that about is further strength in the euro, which is up 1.5 percent against the dollar since a mid-February trough and 5.6 percent since last year. According to Credit Suisse foreign exchange strategists, if the euro keeps improving against the dollar — to, say, $1.44 compared to the current rate of $1.38 – it would likely push the 2016 inflation forecast meaningfully lower. That helps explain, at least in part, Draghi’s hint about a June stimulus, one result of which is that the euro has weakened slightly against the dollar since the ECB meeting. But Credit Suisse believes it would take an actual policy change to weaken the currency, since improving economic factors support a move in the opposite direction.

The euro zone experienced relatively strong year-over-year GDP growth of 0.5 percent in the first quarter, and both retail sales growth and the combined output of the services and manufacturing sectors hit three-year highs in March. Portugal, Ireland and Spain have all emerged on stronger footing from their bailouts over the last year, and Greece was even able to tap the international bond markets in April. Credit Suisse also expects global demand to pick up in the second half of the year, particularly in the United States, which should improve demand for European exports.

The euro faces upward pressure on two additional fronts. First, the euro zone posted a €21.9 billion ($30.1 billion) current account surplus in February, only a slight dip from a record-breaking €25.3 billion ($35 billion) surplus in January. Second, Credit Suisse’s foreign-exchange analysts note in a report entitled, “Stuck in a Moment,” foreign investors have been enthusiastic buyers of euro-denominated assets (particularly equities) since 2010, thanks to low interest rates and steady improvement in peripheral markets. The bank’s equities analysts see the EuroStoxx 50 index heading to 3,600 by the end of the year, 12 percent above current levels.

Until now, Draghi has been able to keep the euro contained simply by reminding markets that the central bank could ease further. But if he and the ECB continue to do nothing, dovish words alone won’t hold the euro back much longer.

Above: Photo of European Central Bank President Mario Draghi by miqu77 courtesy of Shutterstock.com.

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