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EUR/USD fell from 1.2160 to 1.21 after reports the ECB might cut its already negative deposit rate. IIF chief economist Robin Brooks argues that deposit rate cuts are ineffective against euro strength because the currency is driven by longer-dated 5- and 10-year yield differentials.
He says the ECB's focus on the deposit rate is misguided.
If the ECB cannot weaken the euro through short-term rates, the euro may stay firm against the dollar, which would keep dollar-priced commodities relatively cheaper in Europe. Markets may need a larger policy shift to move the rate.
octaafrica.netJan 28, 2021After 129 past neutral macro events, Euro (USD per EUR) moved a median -0.1% over 5 sessions (45% higher; middle half -0.5% to +0.5%), and +0.1% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
