ECB president Mario Draghi has begun his press conference in Tallinn. Selected quotes are as follows:

  • “The Governing council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases”. A key point here is the omission of “lower” when compared to the prior statement which read “at their present levels or lower”.
  • Global recovery is supporting trade but sluggish reform effort dampens recovery
  • Inflation forecasts (CPI): 2017: 1.5% vs 1.7% prior. 2018: 1.3% vs 1.6% prior. 2019: 1.6% vs 1.7% prior
  • Growth forecasts (GDP): 2017: 1.9% vs 1.8% prior. 2018: 1.8% vs 1.7% prior. 2019: 1.7% vs 1.6% prior.

 The last two comments are similar to the sources leak yesterday. The cuts to inflation are fairly significant and seem to usurp the GDP in terms of importance.

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 The EURUSD has fallen to test the 1.12 handle in the past 45 minutes before finding support as Draghi said the following: 

  • “Inflation is mostly driven by price of oil and the price of food. The overall outlook has changed very little since the last meeting.” This comment has taken the edge of the earlier announcement of lower inflation forecasts 

As for the DE30 there has been choppy trade over these events with no clear direction yet. The market remains in a narrow range above the 12700 and 12740.

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