There were two distinct reactions in the Euro to today’s ECB Minutes, released this morning.

At first, the EUR jumped following initial headlines that the ECB acknowledged that revisiting the guidance would be “part of a the regular reassessment” going forward, but noting that any changes are premature at this stage.

 In this context, it was remarked that communication on monetary policy would continue to develop according to the evolving state of the economy in line with the ECB’s forward guidance, with a view to avoiding abrupt or disorderly adjustments at a later stage. However, changes in communication were generally seen to be premature at this juncture, as inflation developments remained subdued despite the robust pace of economic expansion.

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The language pertaining to the monetary policy stance could be revisited early this year as part of the regular reassessment at the forthcoming monetary policy meetings. In this context, some members expressed a preference for dropping the easing bias regarding the APP from the Governing Council’s communication as a tangible reflection of reinforced confidence in a sustained adjustment of the path of inflation. However, it was concluded that such an adjustment was premature and not yet justified by the stronger confidence.

Predictably, this hawkish take prompted a kneejerk move higher in the EUR as algos bought the EUR.

However, what traders focused on next was a rather explicit ECB concern over the weakness of the dollar, as the statement once again highlighted fears that the US administration was deliberately trying to engage in currency wars, something which Mario Draghi famously remarked on during the Q&A in the last ECB press conference, when asked for his response to Mnuchin’s statement.

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