European Central Bank (ECB) press conference yesterday (16/4) were full of talks about QE program, projection of future policies, and ECB position in regard of Greek debt issue.

European Central Bank (ECB) press conference yesterday (16/4) were full of talks about QE program, projection of future policies, and ECB position in regard of Greek debt issue. Apart from that, there is also a surprising protest by a young woman who belongs to the feminist protest group, Femen.

End Dictatorship?

In the last month, ECB has often became target of demonstration and protest. In its press conference in Cyprus last month, on eof the journalists ranted and accused its president of bias against local media. Also in March, Blockupy movement, a left-wing alliance against Austerity and ECB, induced a riot during the opening of new ECB office in Frankfurt by burning cars and clashed with the police.

Kericuhan 

While in the protest yesterday, a Femen activist disguised herself as a journalist and then when conference in session, jumped to the table, throw glitters at Draghi and shouted, End ECB dick-tatorship. It was known later that the woman was an activist named Josephine Witt who also took part in topless protest against Russian President Vladimir Putin in Hannover in 2013.
 

Unjuk


Regardless of the protest's absurdity, rampant protests indicated discontent among European residents about their government policies and ECB as the area's monetary authority. Following the last European crisis, decision makers continues using their powers to dictate countries with high-debt, particularly Greece, and it has made people dissatisfied. 

 

Consistently

Although interrupted by protest, ECB press conference went on with Draghi reiterated its intention to stay consistent with the current policies. Several pointes that was raised were:

1. Economic recovery
Draghi considered the stimulus program that was started last month to have bore fruits. Generally, Eurozone gained benefits from the low oil price, improved government policies, and the stimulus program that went on smoothly.

2. Will not cut rates again, but stimulus go on
Draghi admitted that long period of low interest rates can increase the risk of asset bubbles, but they will keep go on with the original plan of 60billion Euros each month, at least until Spetember 2016. He also did not worry about scarcity, because there were enough assets in the market. Draghi even refused suggestion for ECB to prepare tapering and instead indicated that the QE amount may be adjusted when needed.

3. Better financial system
ECB considered Eurozone banks to be in better condition compared to three years ago. Draghi mentioned that borrowers can gain advantage from ECB QE program that provided liquidities for commercial banks. He said, More accommodative monetary policy is being translated into better credit conditions, which is not something we have seen before. He also mentioned that analysts have upped Eurozone economic growth expectation for 2015 from 1% to 1.5%.

In ECB part, statements clearly showed confidence and optimism. However, many are in doubts over Eurozone future. The thing is, cheap oil price era may end anytime, while government's controversial policies are not yet showed substantial long-term advantages. Sustainable recovery will be difficult to attain as long as many contraproductive rules kept being implemented, including the restrictive employment rules that may have tripled the number of unemployed. Draghi also once again stated, although ECB have created more favorable conditions, but structural reform is essential to be done.

 

The Risk

Decision makers felt optimistic with the current Euro economy recovery, and the sentiment could support Euro downfall in the forex market. Even so, there is still too many risks that will prevent Euro to rise too high, so any bullish movement will likely be limited. Several notable risks are negative bonds yield, and the prolonged Greek debt negotiation.

German's bechmark 10-year bonds yield recently fell to negative, and if it continues then investors may decide to stay away from it. The situation will worsen if other countries' yields drown as well. Aside of it, the longer Greece uncertainties grows, the Grexit speculation will also take root and may push the Euro down. Mario Draghi at the conference did not seem to be particularly concerned and even said that they will continue support Greek banks. However, just like the other two of the Troika (European Commission and IMF), the ECB have taken steps to limit Greece government maneuvers in order to corner them into submitting to the old bailout terms. But as we can see now, Athena still refuses to back down.

In the current circumstances where dissatisfaction spreads around minor Euro countries like Greece, Cyprus, and Spain, and anti-Euro sentiment grows in the UK and France, Grexit may mark the crack on the inter-country economy-political union. Hence, negative news around Greece may stay influential and impacts Euro movements.