Investors mutiny against EZB’s monetary policy

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Written by Julien Mueller | 25 January 2016
Posted in Special research

The EZB surprisingly fails to lure investors with further monetary stimulus talks. The latest sentix Global investor survey shows market confidence in the euro among investors is on the rise – thriving expectations increase chance for euro appreciation. Is the EZB loosing investors’ confidence?

The latest sentix Strategic Bias for the Euro US-Dollar exchange rate, which measures investors’ intermediate-term market expectations (six months), rises unexpected to a new 104 week high. Hence, investors react surprisingly in opposition to EZB’s announcement to consider further monetary policy action. Confidence in the euro is on the rise and the negative effect on the single market currency, as probably aspired by the EZB, fails to materialise (see chart below). It appears that the EZB does not succeed anymore in pressing investors to sell euros in a sufficient volume to depress the euro exchange rate. Nonetheless, this development is not new. Since last November, the sentix strategic Bias has increased, contrasting the development of the exchange rate. A diverging development of the sentix indicator is, due to its leading attributes, an early signal for an immanent change in the euro US-Dollar FX trend.

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Background

The sentix Strategic Bias (investors’ six-month market confidence) is polled on a weekly basis since 2001 as part of the sentix Global Investor Survey. It reflects the strategic view of market participants as well as their basic convictions and perceptions of value for a given market. As this indicator represents investors’ general willingness to buy or sell it should not be interpreted as a contrarian signal. Rather it is usually leading the market by several weeks.

The current sentix Global Investor Survey was conducted from January 21 to January 23, 2016. 1108 individual and institutional investors took part in it.

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