ECB President Christine Lagarde says the euro’s recent appreciation against the dollar—despite global uncertainty—is “counterintuitive, but justified” by a growing loss of confidence in U.S. policymaking.
Lagarde spoke in an interview with French media, La Tribune Dimanche, published on Saturday:
- “It’s impressive to note that in a period of uncertainty when we should normally have seen the dollar appreciate significantly, the opposite happened. It’s counterintuitive, but justified by the uncertainty and loss of confidence in US policies among certain segments of the financial markets.”
Lagarde framed this as an opportunity for Europe to strengthen integration citing:
- the bloc’s perceived stability
- independent central bank
- credible institutions
Comparing the EU with the US:
- “At a time when we see the rule of law, the judicial system, and trade rules being called into question in the US… Europe is rightly perceived as a stable economic and political area”
Lagarde noted the need for efforts to create a unified capital market, saying that their is a “groundswell” of support for this.
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I know Lagarde is talking her book, but proclaiming Europe as a stable political arena is a bit of a stretch. Comments welcome!
I think perhaps she should have mentioned the role Germany’s fiscal bonanza played in EUR gains earlier this year:
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As an aside, there are some moves in weekend markets. Weekend markets are very, very thin and illiquid. Its hard to emphasise how thin and illiquid. Take care reading too much into them. Howevever, there is some late news from Friday to be aware of that’s shoving things around:
Be sure to join us for early Asia on Monday as institutional markets reopen for the week.
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