ECB President Mario Draghi did everything he could today to put a dovish slant on a central bank that’s actively pursuing less monetary stimulus but as we’ve seen before, traders were not interested in what he had to say, it’s what he didn’t say that was important.
The U.S. dollar’s recovery attempt since last week has been futile. Thanks to poor economic data, Fed officials’ dovish comments and fears over the economic impact of the hurricane, not many people are willing to stand in the way of the dollar’s spectacular slump since the turn of the year.
European stock indices stormed higher yesterday and have extended their gains this morning ahead of the European Central Bank rate decision and press conference today. The main focus will be on whether or not the ECB would announce a plan to taper its quantitative easing program, and any comments about the euro, which has climbed to multi-year highs against a number of foreign currencies.
In July, the European Central Bank President Mario Draghi said that the Governing Council would discuss the future of its €60 billion monthly purchases program in the autumn. Technically, autumn in the Northern Hemisphere will not start until Friday, Sept. 22, so there is a possibility that the topic of quantitative easing tapering may not be discussed at this week’s meeting.
If Federal Reserve policy makers were already starting to question the need for another rate hike this year – and the pace thereafter – then this week’s data won’t have made them feel any more comfortable.
“Sell volatility, buy the dip” has been the investor mindset for some time when it comes to the equity markets. It appears that this mindset is holding firm, after investors brushed away the market uncertainty that was created in the early hours of Tuesday morning, following the news that North Korea fired a missile over Japan.