Were verbal efforts to support the euro effective? A high-frequency analysis of ECB statements

Abstract

Using high-frequency euro–dollar exchange rates, we examine the effects of efforts by euro area central bankers to verbally support the euro. Based on a direction, a smoothing and a volatility criterion, we find little evidence that ECB verbal interventions were effective. The most important determinant of effectiveness is whether or not the verbal intervention is captured in the news report headline. Verbal interventions that coincide with releases of macroeconomic data are followed by lower exchange rate volatility. There is no difference in the effects of comments by ECB Executive Board members and NCB presidents.