EUR is bid post Yellsn’s speech and all eyes are on ECB President Draghi’s Jackson Hole speech up next, but markets are already wondering if he will now follow Yellen’s reluctance to show any of her to markets today.
So no perks for FX, but what did Yellen say anyway?
As analysts at Scotiabank point out, expectations are relatively muted following last week’s rumors dampening the prospect of any major shift in tone.
“The ECB’s tapering discussion has been shifted to the October 26 meeting and Draghi’s most recent press conference highlighted a need for patience, persistence, and prudence in policy as a result of subdued inflation pressure. Euro area bond yields are climbing into Draghi’s speech, lending EUR some modest support. Risk reversals retain a moderately bullish bias,: added the analysts at Scotiabank.
It will come at no surprise, considering the strength of the euro, that Draghi will try to avoid a hawkish rhetoric or say much that could be misunderstood by markets. Also, despite some pressure to add anything to when he last instigated the idea of tapering at the last Jackson Hole he attended three years ago, the market could be up for another letdown. “A rise above the 1.1910 level will put the 1.2042 2012 low on the map. Still further up sits the 50% retracement from the move down from the 2014 high at 1.2168,” note analysts at Commerzbank.