SHORT EURUSD: ECB POLICY DECISION & DRAGHI SPEECH HIGHLIGHTS
IMO Draghi was dovish on the margin as expected - once again reiterating the ECB commitment to targets with " If Warranted, Will Act By Using All Available Instruments". Further, he was very pessimistic on many fronts, especially the ECBs key target inflation saying "Inflation Rates Likely to Remain Very Low In Next Few Months" and " Risks to Growth Outlook Remain Tilted to Downside".
All in all this reaffirms my bearish EUR view and supports my medium term short EURUSD traded posted last weekend. Going forward, if low inflation persists the ECB has made it quite clear that it will take action "using all policy tools available", such a statement is very dovish/ bearish.
In the broader view, Draghis dovishness should support risk markets today and help then shrug off the losses they made on the back of the Kuroda misinformation that repeated quotes from 3wks ago - which the market took as new hawkishness from the BOJ Governor.
My favourite nearterm trade now is seeing USDJPY trading back to 107 by 5pm GMT thus holding my bullish view of the risk recovery taking us to 107, then 109 then 111/112 before reversing over the next few weeks. And I expect stock indexes to outperform safe havens on the day (where both trade flat now after safe havens initially pulling away post kurodas reiterated comments/ error from BBCR4).
ECB Chair Mario Draghi Speech Highlights:
-Draghi: Policy Measures Since June 2014 Have Significantly Improved Borrowing Conditions
-Draghi: Financing Conditions Remain Highly Supportive
-Draghi: Will Be in Better Position to Reassess in Coming Months
-Draghi: If Warranted, Will Act By Using All Available Instruments
-Draghi: Data Point to Ongoing Growth in Q2, Though Perhaps Lower Pace Than Q1
-Draghi: Fiscal Stance in Euro Area Expected to Be Mildly Expansionary in 2016
-Draghi: Headwinds to Recovery Include Brexit Referendum Outcome
-Draghi: Risks to Growth Outlook Remain Tilted to Downside
-Draghi: Inflation Rates Likely to Remain Very Low In Next Few Months
-Draghi: Inflation Rates Should Increase Further in 2017, 2018
-Draghi: Essential That Bank Lending Channel Continues to Function Well
-Draghi: Growth Supported by Domestic Demand
-Draghi: Implementation of Structural Reforms Needs to be Stepped Up
-Draghi: Council Concluded that We Didn't Have Information to Take Decisions
-Draghi: Brexit Didn't Seem to Have Major Impact on Inflation Outlook
-Draghi: Need More Time to Assess State of Market-Based Inflation Expectations
-Draghi: If Warranted, Council Will Act By Using All Instruments in Mandate 2016.
-Draghi: Should Take Brexit Impact Estimates With Caution
-Draghi: Markets, Banking Sector Have Reacted in Fairly Resilient Fashion to Brexit
-Draghi: We View Our QE Program, TLTRO Program As Quite Successful
-Draghi: Past Evidence Shows Our Ability to Adapt Programs
-Draghi: Have Not Discussed Tapering
-Draghi: Very Important that Message of Stability Come out of G20, Given Uncertainties
-Draghi: Very Difficult to Foresee Significant Impact of Turkey Unrest on Eurozone in Immediate Future
-Draghi: Very Difficult to Understand How Geopolitical Uncertainties Affect Eurozone
-Draghi: We See Inflation Moving Forward According to Baseline Scenario
-Draghi: No Attention Given to Discuss Specific Instruments
-Draghi: Bank Equity Prices of Some Significance for Policy Makers
-Draghi: Problem Now Is Weak Bank Profitability Not Solvency
-Draghi: Events in Turkey Could Undermine Confidence
-Draghi: On Solvency Side, Our Banks Are Better Than Before
-Draghi: Problem Now Is Weak Bank Profitability Not Solvency
-Draghi: Monetary Policy Measures Undertaken When Many Headwinds In Place
-Draghi: There's An Interest in Solving Problem Quickly, But Problem By Nature Slow to Resolve
ECB Monetary Policy Decision - Unchanged as expected:
- ECB MAIN REFI RATE UNCHANGED AT 0%
- DEPOSIT FACILITY RATE AT -0.40%
- MARGINAL LENDING RATE UNCHANGED AT 0.25%
- ECB ASSET PURCHASE T
All in all this reaffirms my bearish EUR view and supports my medium term short EURUSD traded posted last weekend. Going forward, if low inflation persists the ECB has made it quite clear that it will take action "using all policy tools available", such a statement is very dovish/ bearish.
In the broader view, Draghis dovishness should support risk markets today and help then shrug off the losses they made on the back of the Kuroda misinformation that repeated quotes from 3wks ago - which the market took as new hawkishness from the BOJ Governor.
My favourite nearterm trade now is seeing USDJPY trading back to 107 by 5pm GMT thus holding my bullish view of the risk recovery taking us to 107, then 109 then 111/112 before reversing over the next few weeks. And I expect stock indexes to outperform safe havens on the day (where both trade flat now after safe havens initially pulling away post kurodas reiterated comments/ error from BBCR4).
ECB Chair Mario Draghi Speech Highlights:
-Draghi: Policy Measures Since June 2014 Have Significantly Improved Borrowing Conditions
-Draghi: Financing Conditions Remain Highly Supportive
-Draghi: Will Be in Better Position to Reassess in Coming Months
-Draghi: If Warranted, Will Act By Using All Available Instruments
-Draghi: Data Point to Ongoing Growth in Q2, Though Perhaps Lower Pace Than Q1
-Draghi: Fiscal Stance in Euro Area Expected to Be Mildly Expansionary in 2016
-Draghi: Headwinds to Recovery Include Brexit Referendum Outcome
-Draghi: Risks to Growth Outlook Remain Tilted to Downside
-Draghi: Inflation Rates Likely to Remain Very Low In Next Few Months
-Draghi: Inflation Rates Should Increase Further in 2017, 2018
-Draghi: Essential That Bank Lending Channel Continues to Function Well
-Draghi: Growth Supported by Domestic Demand
-Draghi: Implementation of Structural Reforms Needs to be Stepped Up
-Draghi: Council Concluded that We Didn't Have Information to Take Decisions
-Draghi: Brexit Didn't Seem to Have Major Impact on Inflation Outlook
-Draghi: Need More Time to Assess State of Market-Based Inflation Expectations
-Draghi: If Warranted, Council Will Act By Using All Instruments in Mandate 2016.
-Draghi: Should Take Brexit Impact Estimates With Caution
-Draghi: Markets, Banking Sector Have Reacted in Fairly Resilient Fashion to Brexit
-Draghi: We View Our QE Program, TLTRO Program As Quite Successful
-Draghi: Past Evidence Shows Our Ability to Adapt Programs
-Draghi: Have Not Discussed Tapering
-Draghi: Very Important that Message of Stability Come out of G20, Given Uncertainties
-Draghi: Very Difficult to Foresee Significant Impact of Turkey Unrest on Eurozone in Immediate Future
-Draghi: Very Difficult to Understand How Geopolitical Uncertainties Affect Eurozone
-Draghi: We See Inflation Moving Forward According to Baseline Scenario
-Draghi: No Attention Given to Discuss Specific Instruments
-Draghi: Bank Equity Prices of Some Significance for Policy Makers
-Draghi: Problem Now Is Weak Bank Profitability Not Solvency
-Draghi: Events in Turkey Could Undermine Confidence
-Draghi: On Solvency Side, Our Banks Are Better Than Before
-Draghi: Problem Now Is Weak Bank Profitability Not Solvency
-Draghi: Monetary Policy Measures Undertaken When Many Headwinds In Place
-Draghi: There's An Interest in Solving Problem Quickly, But Problem By Nature Slow to Resolve
ECB Monetary Policy Decision - Unchanged as expected:
- ECB MAIN REFI RATE UNCHANGED AT 0%
- DEPOSIT FACILITY RATE AT -0.40%
- MARGINAL LENDING RATE UNCHANGED AT 0.25%
- ECB ASSET PURCHASE T
