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Jakobsen: Be long euro to "test" the ECB
Be long euro dollar to test the ECB. That's the call from Steen Jakobsen following the Central Bank’s monthly meeting. Saxo Bank's Chief Investment Officer says "no one believes" the ECB and everyone wants to see just what they'll do next. He says we're certain to see deflation in the Eurozone and that will provoke renewed policy responses.
On Thursday the ECB kept its key interest rates on hold. However, its president Mario Draghi, gave little indication he was going to act on a growing concern that deflation is about to take hold of the continent. He did say that there were still plenty of options open to him. Jakobsen disagrees.
Despite poor economic fundamentals, Steen says the euro is relatively strong against the dollar for two reasons. First, capital inflows in terms of investment equity has a preference for Europe as European equity markets look cheap. Secondly, Europe has less inflation than the US so the purchasing power of the euro increases.
01:40 minutes
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