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EUR: Draghi in spotlight as EUR recovers despite weak Chinese PMI - MUFG

FXStreet (Delhi) – Derek Halpenny, Research Analyst at MUFG, notes that all Asian equity markets closed lower today with weak data from China and continued investor concern over the potential fallout for the auto sector from the emissions crisis hitting Volkswagon concerning investors. However, Euro is on firm ground and the stability today is more akin to the safe-haven characteristics that the euro has been showing since financial market volatility escalated earlier this year.

Key Quotes

“The only way that resilience will be broken will be through strong hints from the ECB that additional monetary easing will be implemented to ensure the ECB’s inflation target will be met. That rhetoric has been more forthcoming of late (Praet stating that the ECB would react “forcefully” and Coeure stating that the ECB is ready to extend QE) but President Draghi’s quarterly hearing before the Committee on Economic and Monetary Affairs at the European parliament today is an ideal opportunity to send a strong message on doing what is necessary in order to reach the ECB’s inflation goal.”

“However, in circumstances of such financial market volatility at present, it is hard to envisage a scenario where President Draghi is forceful enough with his comments to drive the euro considerably lower.”

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