MARIO DRAGHI’S signal Thursday that the European Central Bank (ECB) is about to unleash even more monetary stimulus sent the euro and bond yields lower while supercharging European stocks.

    What’s much less certain is whether any of that can be sustained for long.

    Weakening the euro is one critical way in which the ECB can spur the economy and inflation by cheapening exports and partly offsetting the slump in dollar-priced commodities.

    But none of the 12 big investment banks contacted by Reuters on Friday said they were considering changes to their existing currency forecasts in light of Draghi’s speech.

    Only a few said they were reviewing bond yield forecasts.

    In part that is because several banks were already predicting a substantially weaker euro, with Deutsche Bank among most aggressive calling for a plunge through parity against the dollar to US$0.85 by the end of 2017.

    The ECB president’s hint Thursday at hundreds of billions of euros of extra quantitative easing bond purchases and an even deeper negative deposit rate fits the consensus view that the euro should weaken.

    But it doesn’t seem to have made anyone more or less bearish.

    Draghi’s comments have raised questions on how deeply into uncharted waters the ECB is prepared to go, and pressure on the U.S. Federal Reserve not to hike.

    “I’m still in shock,” said Martin van Vliet, senior rate strategist at ING.

    Traders rushed to price in a 50-50 chance of a 10 basis point cut in the deposit rate in December to -0.30 percent from no chance at all before Draghi’s press conference. They’re pricing in a one-in-five chance of a similar cut next year.

    The euro and bond yields sank, stocks rallied and inflation expectations rose.

    (SD-Agencies)