After the last ECB meeting on the monetary policy, there was some kind of understatement.The program of quantitative easing has been extended, but not for the first time, and it is natural that investors have a fair question about the possibility of its further extension. However, during the press conference, Mario Draghi did not say anything about it, so investors did not get answers to their questions. Yesterday, everything fell into place when the ECB head openly stated that he did not rule out a further extension of the quantitative easing program. He argued that the ECB is forced to use extreme measures to mitigate the negative consequences of the trade war with the United States. So it is clear that the ECB has radically changed its approach to this issue, and if earlier the rationale for the endless extension of the quantitative easing program was inflation, now it is not even mentioned, although it has already approached the coveted 2.0%. Thus, many are beginning to think more and more that the reason for starting and extending the quantitative easing program is not inflation and economic growth, but in excessive debts hanging on the countries of the European Union. That's just the problem no one solves, and the inclusion of the ECB printing press gives only little leeway. It's impossible to print money forever, and if the problem of debts does not begin to be solved, then the efforts of the ECB will be useless. And if it is a matter of debt, which few people doubt, then, given the inaction of the countries of the European Union to address this issue, it turns out that the program of quantitative easing will operate forever.
Mario Draghi did not ignore the issue of the refinancing rate, saying that it could be raised only after the completion of the quantitative easing program. Given the current ECB plan, this issue can be considered only six months after the completion of the quantitative easing program. If the ECB continues to extend the program of quantitative easing, the refinancing rate will never be raised.
So it is not surprising that the single European currency yesterday continued to lose its position with renewed force. And the decline began before Mario Draghi's speech, which means that investors were waiting for answers to their questions and feared the worst. Unfortunately, their fears were confirmed.
If we talk about what is happening in the US, the situation in the construction industry has remained almost unchanged, although the prospects are not the best. The number of construction projects has increased from 1,286 thousand to 1,350 thousand, and the issued construction permits decreased from 1,364 thousand to 1,301 thousand. The total balance increased by 1,000. However, a sharp decrease in the number of issued construction permits indicates that, that the number of construction projects in the future will also decline. Unlike the US, in Europe, the growth rate of the construction industry accelerated from 1.2% to 1.8%.
Today, Mario Draghi will speak again, but no surprises are expected, as the ECB head has already given answers to the most pressing questions. In the US, there are data on the sale of housing in the secondary market, which should increase from 5.46 million to 5.52 million.
Given the slight confusion that has engulfed the market, one should not even wait for hints of strengthening the single European currency. Especially as the statistics in the US is expected to be good. But do not forget about the excessive overbought dollar, which will restrain its growth. Thus, the single European currency will consolidate near 1.1550.