Summary:

• Draghi toes similar line to prior press conference
• ECB keep all rates on hold as widely expected
• EURUSD dips below 1.17; DE30 looks to move higher

Today’s ECB decision marks the 6th anniversary of the famous “whatever it takes” line from Draghi in reference to what the central bank would do to save the Euro, but unfortunately there wasn’t any major fireworks this lunchtime. The latest event has seen a similar message to the previous one delivered by the governing council with the Euro drifting a little lower in the aftermath. The central bank kept all rates on hold – as was widely expected – and the key event was likely to always be the press conference with President Draghi. The opening statement from the Italian was moderately upbeat but with still enough caution in there to warrant it being described as fairly mixed on the whole. Selected comments were as follows:

• Economy proceeding along solid, broad based growth path
• The latest data has stabilised and is in line with forecasts
• Underlying inflation remains muted but to rise gradually in the medium term

Given the limited amount of new information there was limited market reaction, but the Q&A session did throw up some more market moving comments. While the responses were arguably slightly dovish on the whole it should be pointed out that there was nothing really major here. Selected remarks from the Q&A were as follows:

• We took note of the Trump-Juncker meeting. It’s a good sign
• Overall risks are still broadly balanced
• Money market expectations are very well-aligned with ECB message
• The only version of the statement that conveys the policy message is the English version

This last point is of particular interest, even if it did not have much of an impact. There was some confusion following the comment at the previous press conference that rates would “remain at their present levels at least through the summer of 2019” due to the fact that different language translations seemed to report the line in a different way. 

 The translation of a key line in the previous statement has caused some confusion as to its interpretation. Draghi today said the English version is the one that should be taken as conveying the policy message. Source: Bloomberg, ECB

In terms of market reaction it’s been fairly muted with the EURUSD falling back below the 1.17 and the DE30 moving near its highest level of the day. Perhaps the clearest move has come in the bond market with the 10-year Bund (BUND10Y on xStation) pushing higher after initially dropping lower.

The Bund has now recouped all of the losses seen following last night’s good news on trade from the US and EU, with price back at the 162.30 level. Source: xStation

 The EURUSD remains in a consolidation pattern after pulling back from the rising trendline and moving back below the 1.17 handle. 1.1510 remains potentially key support on the downside. Source: xStation