Mario Draghi and the ECB

The ECB top officials to move slowly towards paring back stimulus, Draghi’s speech on tap

Apr 11 • Morning Roll Call • 216 Views • No Comments

As several reports have pointed out the weak start of the year, there has been cautious confidence expressed by the ECB top officials. On Monday we have witnessed signals from President Mario Draghi and his senior colleagues regarding the inflation and its low levels, as well as the new threat of the global trade row. While the inflation remains too low according to their opinion, the upturn is still intact. The macro-economic data has recently brought disappointing results, with measures for economic activity and retail sales that have missed the forecasts, leading towards lower investor confidence. The biggest impact came first from Germany, where the exports and industrial output saw a sharp drop in February, followed by Italian and French industrial and manufacturing production respectively, coming with an unexpected decline.

Nevertheless, chief economist Peter Praet has stated that during the first few months of the year, a number of indicators have softened, however that have remained in line with the previously set scenario and there are no reasons to change the assessment of the projections, but as the downside risks have increased, caution is needed. In addition, President Draghi stated that patience is needed for inflationary pressures to build up and persistence is needed in the monetary policy for inflation dynamics to become durable and self-sustained. What will be said today is still to see.

Looking at the important news releases yesterday, Canada came with mixed results, while the US came with better that expected releases. Namely, the CAD Housing starts came better than expected with 225k as opposed to the 219k forecasted, but the building permits declined from previous 5.6% February to -2.6% in March. On the other hand, US PPI was forecasted to 0.2% but advanced to 0.3% in March.

Tomorrow traders will be looking at the initial jobless claims and the Treasury budget deficit news coming from the US. From Europe we will be expecting the CPI from Italy, Eurozone Industrial Production and ECB Monetary Policy meeting accounts. UK is bringing the BoE Credit Conditions Survey and later in the day, BoE Governor Carney speech.

EUR/USD

The pair is still under bullish sentiment, however is still trading quietly before the European market session. EUR/USD is trading around the 1.2360 level and higher volatility can be expected later today when President Draghi will be delivering his speech, with USD CPI later in the day.
GBP/USD

GBP/USD retains a positive stance and has enhanced almost 200 pips during the last 3 trading days, trading currently at 1.4195. If the pair continues to advance, the next level to breach is the March high of 1.4244. Chances are still on the upside.
USD/JPY

The pair is trading around 107.05 range after it managed to hit the session low of 106.96. USD/JPY is still on the bullish stance and a break above 107.90 can lead towards continued uptrend.
Gold

Gold is trading on the bullish side as well as it managed to hit the one week high of $1,342 during the Asian session and is expected to continue the trend in the European session as well.

ECONOMIC CALENDAR EVENTS FOR APRIL 11th

AUD RBA Gov. Lowe Speaks
GBP Manufacturing Production m/m
GBP Good Trade Balance
EUR ECB President Draghi Speaks
USD CPI m/m
USD Core CPI m/m
USD FOMC Meeting Minutes

 

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