Comments from Nowotny on MNI are boosting the euro:
- Don’t see any tool we could use against strong euro
- Room to maneuver on liquidity but not on interest rates
- Don’t welcome euro appreciation but must live with it
- Prospects for eurozone growth ‘balanced and improving’
- Big consensus on the need to avoid a liquidity cliff.
The verdict is coming in and the ECB doesn’t want to go to negative deposit rates. The comments have boosted the euro by 20 pips and they’re a step farther than what he said two weeks ago. What’s being overlooked is his drift toward another LTRO, which now sounds highly likely in Q1 as the first LTRO rolls off.
