When a central banker takes a victory lap

Draghi sounds far too satisfied to surprise the market with something dovish

Here's the headline:

"ECB's Draghi says the transmission of monetary policy is proving to be very effective."

Draghi wrote that in a letter to Jonás Fernandez, a Member of the European Parliament.

He continued, "we have ample evidence that our measures have substantially eased the borrowing conditions of firms and households, strengthened credit creation and, hence, supported the momentum of the euro area's economic recovery."

I'm probably reading too much into one line but this is a bit of a victory lap.

To me, when a central banker takes a victory lap, it means they're not going to do more. They're not feeling the pressure and they're satisfied with where they're at.

What does it mean for the Dec 7 ECB meeting?

Alone, it means that the risks are that Draghi does less. Of course, he will loosen the capital key and extend QE by six months but he also might hint that the extension will probably be the end of the road. If that's the case, the euro could be off to the races.

Update: The euro made a long-term bottom at 1.0350 in December 2016 and continued higher to 1.2500 with most of the gains within 8 months of this post.