Euro traders left clueless as Draghi threatens nothing

Currency traders were put through their paces during Draghi’s press conference Thursday.

The ECB left its benchmark rates unchanged, failing to grasp the nettle and stimulate the economy by opting for a negative deposit rate. The policy statement did, however, appear to take a step closer to adopting quantitative easing, which Mr. Draghi said culminated this month in a “rich discussion” on the topic. Last month, he said, there was no discussion on the topic. The sensation that a strengthening currency has started to feed through to threateningly lower inflation has shifted opinion around the Eurozone with many suggesting the ECB will ultimately move to buy bonds, much like other central banks in an effort to stimulate growth. Despite the discussion, the ECB failed to announce a move in April. QE might weaken the euro currency, while failure to act might lift the unit. Such failure to act might make the onset of QE inevitable in the future. As a result and as the intraday chart clearly illustrates, traders haven’t got a clue what to do with the euro currency!

 

Euro currency broke the range at both ends as Draghi spoke

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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