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ECB Sees Modest Recovery Through 2016 on Updated Forecasts

By Gregory Marks
06 March 2014 15:19 GMT

Talking Points:

-EUR strength on ECB inaction, confidence

-ECB releases 2016 and updated 2014/15 forecasts

-View key Draghi headlines here

The Euro continued to breach resistance levels to the upside and hold strength following the ECB Rate Decision and Draghi press conference. Rates came in unchanged at market expectations while Mr. Draghi failed to lay out any further, non-standard measures that the central bank would pursue. Some market participants speculated that, following an OMT nod by German courts, the central bank head might hint at such non-standard measures that could be used to help boost lending and tackle disinflation risks. Instead, Mr. Draghi voiced his confidence during the press conference and even updated some forecasts (see green figures below).

Moving forward, it is likely the case that key technical levels to the upside may serve as major catalysts in price action, in addition to greenback sentiment after massive setbacks over the past few days. At the time of this report, we are seeing EUR/USD hold gains while elsewhere in the market we are seeing fresh record highs in the S&P 500. Event risk moving forward includes of course the U.S. and Canadian payroll data out tomorrow (Friday 13:30GMT).

ECB Forecasts*

3/6/14

Prior

ECB Forecasts*

3/6/14

Prior

2016 GDP

1.8%

-

2014 Gov. Consumption

0.4%

0.3%

2015 GDP

1.5%

1.5%

2015 Gov. Consumption

0.4%

0.4%

2014 GDP

1.2%

1.1%

2016 Gov. Consumption

0.7%

-

2016 Inflation

1.5%

-

2014 Exports

3.6%

-

2016 Inflation (4Q)

1.7%

-

2014 Imports

3.5%

-

2015 Inflation

1.3%

1.3%

2015 Exports

4.7%

-

2014 Inflation

1.0%

1.1%

2015 Imports

4.7%

-

2014 Private Consumption

0.7%

0.7%

2016 Exports

5.1%

-

2015 Private Consumption

1.2%

1.2%

2016 Imports

5.2%

-

2016 Private Consumption

1.4%

-

2014 Debt-to-GDP

93.5%

93.6%

2014 Unemployment

11.9%

12%

2015 Debt-to-GDP

93.2%

93.1%

2015 Unemployment

11.7%

11.8%

2016 Debt-to-GDP

92.2%

-

2016 Unemployment

11.4%

-

2014 C.A. Surplus

2.4%

2.2%

2014 Budget Deficit

2.7%

2.6%

2015 C.A. Surplus

2.6%

2.6%

2015 Budget Deficit

2.5%

2.4%

2016 C.A. Surplus

2.7%

-

2016 Budget Deficit

2.1%

*Note: All ECB Forecasts assume EUR/USD exchange rate of $1.36 for 2014, 2015 and 2016. All forecasts also assume that oil prices per barrel will be $105.8 for 2014, $101.1 for 2015 and $96.9 for 2016.

March 6th, 2014 ECB Rate Decision EUR/USD (15-Minute Chart)

ECB_Sees_Modest_Recovery_Through_2016_on_Updated_Forecasts_body_Picture_1.png, ECB Sees Modest Recovery Through 2016 on Updated Forecasts

Source: FXCM Marketscope

Gregory Marks, DailyFX Research Team

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06 March 2014 15:19 GMT