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Bob Mason
Press Conference - Eurogroup finance ministers, Luxembourg

It’s been a quiet start to the European session, with no stats for the markets to consider early on.

This afternoon, however, the ECB minutes drew attention ahead of consumer confidence figures due out later in the day.

ECB Monetary Policy Meeting Minutes

The minutes from the late January meeting painted a relatively optimistic outlook on what lies ahead.

Salient points from the minutes included:

  • Activity in the 4th quarter was likely to have seen a less pronounced decline than had been envisaged in Q4 of 2020.
  • The recent intensification of the pandemic, however, was likely to weigh more heavily on activity in the Q1 of 2020 than had been foreseen earlier.
  • Net-net, developments remained broadly in line with the December baseline projection overall.
  • Members also noted that an extension of the containment measures beyond Q4 of 2020 had been incorporated into the December projections.
  • On the downside, however, members argued that the forecasted fast rebound in growth might be too optimistic.
  • Vaccination roll-outs were proving to be slow. There were also concerns over the spread of new, more virulent, mutations of the virus.
  • Members noted, however, that the economic costs of containment measures were lower than in Spring 2020.
  • While containment measures were stricter, more fiscal support and better adjustments by firms to cope with restrictions softened the blow.
  • Looking ahead, favorable financial conditions, an expansionary fiscal stance, and a recovery in demand should support the economic recovery.
  • Members assessed that risks remained tilted to the downside but had become less pronounced.

Market Impact

The EUR got a boost in response to the minutes, rising from a pre-release $1.20624 to a post-release high and current day high $1.20849.

At the time of writing, the EUR was up by 0.41% to $1.20837.

For the European majors, the DAX30 held onto gains following the release. The CAC40 and the EuroStoxx600 continued to struggle.

At the time of writing, the DAX30 was up by 0.28%. The CAC40 and EuroStoxx600 were down by 0.14% and by 0.12% respectively, however.

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