• Draghi press conference provides no great shocks
  • Overall tone erring on the dovish side
  • Euro moving steadily lower. Stocks move to their daily highs

ECB President Mario Draghi has just concluded his press conference following the earlier announcement that the central bank would extend their QE programme by 9 months at a slower pace of purchases (30B Euros) and keep all major rates unchanged. The prepared statement and Q&A session provided no major shocks with the following selected comments the most noteworthy:

  • Decision to extend QE was not unanimous
  • Broad consensus on some issues to a large majority on others
  • Large majority preferred to keep bond buys open ended
  •  Didn’t discuss the parameters or limits of QE
  • QE is not going to stop suddenly
  • Market reaction was relatively muted, which seems to say our communication was pretty effective

The final bullet point here sums it up pretty well with Draghi correct in that the market reaction was relatively muted. There was a notable drop seen in the Euro when the initial decision was announced with the EURUSD falling by some 80 below the 1.18 handle. Stocks received a boost with the DE30 breaking back above the 13000 level whilst the SPA35 added to earlier gains to hit its highest level since August. Yields on German bonds fell with the 10 year Bund rising by around half a handle to 161.70 following the release. 

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 The Euro fell following the announcement that the QE programme would be extended. Source: xStation

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 Longer term the head and shoulders formation identified in previous posts remains valid with the neckline potentially key support from 1.1660-1.1700. Source: xStation