EURUSD Jumps After ECB Hints At Rate Hike, Report Weidmann May Replace Draghi

Tyler Durden's picture

Having surged after The Fed hiked rates 'dovishly', EURUSD is surging- bouncing off 1.07 the figure - after ECB Council member Nowotny told Handelsblatt that a "rate increase may be on the way."

The European Central Bank (ECB) could be heading away from loose monetary policy in a different manner than the U.S. Federal Reserve, Ewald Nowotny, the Austrian ECB council member, told Handelsblatt in an exclusive interview.


The American model was to finish bond purchases first, but this model might not transfer well to Europe, said Mr. Nowotny, who also serves as the Austrian National Bank governor. All interest rates also wouldn’t have to be increased simultaneously nor to the same extent, he added. 


“The ECB could also raise the deposit rate earlier than the prime rate,” Mr. Nowotny said.

While this may be nothing more than a market-reaction gauging trial balloon, what was more interesting in the German report, is that it suggests in 2019 none other than Europe's uberhawk (if only on paper) Jens Weidmann may replace Mario Draghi.

On the topic of the succession of ECB President Mario Draghi, whose term expires in 2019, Mr. Nowotny said that decisions were being made “in the political sphere,” and they were out of the hands of the central bank chiefs.


Mr. Nowotny said he assumes that it will be a selection process between the most qualified. When it comes to the most likely picks, Germany’s central bank president Jens Weidmann and his French colleague François Villeroy de Galhau rank up there, “no doubt about it,” Mr. Nowotny said.


Jens Weidmann is a “highly valued colleague,” Mr. Nowotny said, and the Austrian National Bank has very close relations with the German central bank, the Bundesbank

As a result, EURUSD's early weakness is erased.

Bund Futures are under pressure on the news (as the TSY-Bund spread narrows).. Selling Bunds, Buying Treasuries

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chicken_goose's picture

Do it, I reckon just a single 25bps rate hike from the ECB will show everyone how insolvent the Eurozone Banking System truly is - most investors seem to think rate hikes will be good for them, how wrong they are...

Countrybunkererd's picture

as silverer said... "Global Weimar Bitches!"

1.21 jigawatts's picture

One good fart upward would destroy this straw house we call an economy.

Countrybunkererd's picture

I keep having a recurring thought... the reaction to the FED is a precursor signal of hyperinflation.  Nothing i can pinpoint yet in any confidence to state and that is even more scary to me.

Haus-Targaryen's picture

What a stupid currency the euro is. 

walküre's picture

The funny thing is that every Pedro, Hans, Pierre or Henk can say something about the currency and the market laps it up.

Nowotny is a nobody. Austrian governor making predictions about 2019.. oh for sure

Deutsch Mark comes back in 2020.. or sooner depending on how soon operation "get ze gold" is finished!

Rainman's picture

hmm... surely the ECB balance sheet must be bigger with fiatscos than the Fed and BOJ by now.

If there is a God, the euro currency must die.


The Count's picture

The ECB, IMF and FED are the source of all evil. What will it take to bring them down?

chicken_goose's picture

Also the BoE, BoJ and SNB - don't forget them. In-fact, just all Central Banks tbh - fuck them all.

The Count's picture

Wait, there is more... the BIS....evil flying under the radar.

buzzsaw99's picture

Draghi: I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part!

Juncker: We're just the guys to do it.

JTimchenko's picture

Amazing. Goodman was right on the money with his call, predicting that the "zombie Euro" will rise a lot, and the US dollar will fall a lot, before the Euro disappears.

This removes any lingering doubt about the "manipulation theory" of investing.

There clearly IS a Synod of banks, and they are manipulating all markets, especially gold. If there wasn't, the predictions would not be so accurate. These banksters will strip cash from the horde of clueless fools (aka overleveraged non-connected hedge fund managers) who piled into the long dollar trade. It will be as easy as taking candy from babies, because those fools believe charts that the banksters can easily paint.

The Euro will collapse, but not until the banksters have strip-mined the long dollar trade. Then, once the Euro goes up, it will subsequently collapse, as the banksters retrn to the upward pump on the dollar, and a stripping of cash from the long Euro "traders".

samjam7's picture

Swiss Central Banker T. Jordan giving interview to Swiss media today:

If we look at the relation between FX reserves and GDP we can see we're in a sphere that no other country has reached in the world. What kind of dangers does this entail?

We have a very large balance sheet valued at market prices. Depending on how these prices develop we may have a lot of earnings or losses. This does not pose any dangers for the functioning of our monetary policy. But there could be phases - or years - where we incur losses and in those years we would not be able to pay out earnings to the Cantons or the Swiss government. 

Never heard of negative equity and how this compromises Central Banks I guess, also he doesn't care about the consequences of not being able to pay out 1 billion each year on which the states and communes depend. As long as the global ponzi can continue for the time being.

This is beyond disgusting... 

walküre's picture

There is no true national currency anymore. There are private bankers and public debt slaves.

Until we declare the private banker's paper nil and void and start coining our own national currencies, the debt serfdom will continue forever.

vegas's picture

You fucking weasels at the ECB have all day to drop hints, and you wait until nighttime to drop this on the EURUSD & EUR crosses? Vampire Squid must need to sell inventory to buy stops to get out; just like the U.S. FED, everything is done for the insiders when market conditions are the most illiquid and quiet to get the maximum squeeze. Fucking pathetic weasels.

NoWayJose's picture

Coordinated? It does not seem like a normal reaction to a hike.

trouba z ceska's picture

Bullish news for US stocks! Don't know why, but there's no doubt about it

gatorengineer's picture

I tool a long nap this afternoon, seems everything is now fixed in euro land.  what did it?  I assume unemployment is now under 10 percent in France and elsewhere?