Bundesbank no longer sufficient grounds to criticize the ECB

German administration no longer sufficient grounds to criticize the President of the ECB and to resist led monetary policy in the Euro zone. Recent data showed a slowdown in the pace of the German economy, considered as leader in the EU. This should reduce attacks by the Bundesbank to Mario Draghi, and attempts by the German prevent the active policy of the ECB to provide more incentives for growth.

German side demonstrated some time its concerns about the sharp rise in inflation. Data on price levels, however, show increasing risks of deflation. That the ECB continues its active policy. It is a stimulating factor that will deepen the decline of EUR against the green currency and increasing risk appetite for investments in shares. This factor, however, will not be able to form the overall movement of euro currency and because under more pessimistic setting to the anticipated actions of the Fed interest rate increase, together with the bad data from China and the ongoing global economic downtrend, USD can also be squeezed, including against low-interest JPY and EUR.

Today will be published the minutes of the last meeting of the Fed. Some of the comments into account that the data identified therein are obsolete because they are before the last disappointing report on the US labor office. Others, however, accept that the labor market in the US is stable and positive, as the only obstacle to the Fed remains the general price level.

Attention must constantly be directed to the problems of developing markets. Russian recession combined with geopolitical moves of Putin, the devaluation of the Brazilian currency and successive corruption scandals at the highest level as well as the devaluation of the Turkish lira, complete with a refugee crisis, directed towards Europe, set up many additional risks. Oil markets remain in focus, as geopolitical movement, while short-term speculators are trying to trade a surprise build in crude inventories in the US.

G.Hristov / Head of Fundamental Analyzes