NY Open: Hawkish Draghi headlines may be misleading NY Open: Hawkish Draghi headlines may be misleading NY Open: Hawkish Draghi headlines may be misleading

NY Open: Hawkish Draghi headlines may be misleading

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  The euro jumped on reports of a newly hawkish ECB today, but a closer look at Mario Draghi's address shows little to get excited about.

EURUSD spiked to 1.1814 from 1.1752 in early New York trading. News headlines accusing European Central Bank President Mario Draghi of turning “hawkish” triggered the move. In Draghi’s opening statement to the Committee on Economic and Monetary Affairs of the European Parliament, the headline writers cherry-picked a phrase and wrote “Draghi sees a relatively vigourous pick-up in underlying inflation.”

The phrase is accurate but taken out of context. His words are “Looking forward, annual rates of HICP inflation are likely to hover around current levels in the coming months and are projected to reach 1.7% in each year between now and 2020. This stable profile conceals a slowing contribution from the non-core components of the general index, and a relatively vigorous pick-up in underlying inflation.

Reflecting these dynamics, the ECB projections foresee inflation excluding food and energy reaching 1.8% in 2020.”

Draghi did not say anything new. He repeated “we will continue to provide substantial monetary stimulus by combining three policy measures: first, our enhanced forward guidance on the key ECB interest rates, which we expect to remain at present levels at least through the summer next year, and in any case for as long as necessary to ensure the continued convergence of inflation towards our aim. second, the residual net asset purchases that we will be conducting until the end of this year; and third, the reinvestment of the substantial stock of acquired securities.

EURUSD short-term technicals are bullish while trading above 1.1680. A break above 1.1820 targets 1.1930 while a move below 1.1760 would target 1.1720. The US dollar is mixed against the other major G-10 currencies, posting small gains against the Swiss franc and the Antipodean currencies while inching lower against the Japanese yen, British pound, and Canadian dollar.

Wall Street traders didn’t take kindly to the news that China cancelled the next round of trade talks with the US and the three major indices are trading lower in early trading.

Source: Saxo Bank


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.