Draghi has stuck with the same script as last month but the market doesn’t like it.
A few things are weighing.
- He maintained that growth risks are to the downside. There was hope of a more balanced view given the recent improvements in data.
- Growth estimates continue to show a pessimistic outlook. The ECB sees 2013 GDP at -0.4% vs -0.6% previously; 2014 at +1.0% vs +1.1% previously. The 2014 forecast is especially disappointing for anyone hoping for a strong recovery.
- He warned recent developments (ie taper talk) could negatively affect economic conditions. That’s a fresh negative catalyst.
- Rates to stay low for ‘extended period’. This is a repeat line but, again, there was some slim hope for something more hawkish
- The fall later extended as Draghi said the ECB discussed a rate cut
EUR/USD is trading at a session low of 1.3151 from 1.3215 before the press conference. Tuesday’s’s spike low of 1.3138 is support but the main levels to watch is the 200-day moving average at 1.3146 along with the 100-day at 1.3138. If those levels break on an interday basis, the close will be important.
Mario Draghi speaking at today’s press conference
