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Draghi’s “no news” is good news for EUR/USD

The ECB left policy unchanged as widely expected. And now, ECB President Mario Draghi meets the press to explain the current situation. This is the last press conference of the year.

Mario Draghi does not provide any announcements nor any hints. This allows EUR/USD to shoot higher. Some had expected a new LTRO to be introduced or hints about a negative deposit rate to appear.


  • Rate cut was justified.
  • 2014 GDP growth upgraded from 1% to 1.1%.
  • CPI projection until 2015 remain low
  • Core CPI seen drifting higher.
  • Brief discussion on a negative rate.
  • LTRO needs to have impact on real economy – complex.
  • Watching exchange rate. Wasn’t included in statement, but without a specific reason.
  • We stand ready to act and have “artillery”.

Live blog

  • Press conference begins at 13:30 GMT. All times are GMT.
  • 13:32 While Draghi is taking his time, the US reported a big drop in jobless claims, to 298K, below the 300K benchmark.
  • 13:36 Draghi begins talking – late start
  • 13:37 Underlying price pressures are expected to remain subdued. EUR/USD slides a bit.
  • 13:39 Improving in financial markets making their way to the real economy.
  • 13:40 GDP growth for 2014 has been upgraded to 1.1% from 1% in the ECB’s forecasts.
  • 13:41 Inflation is expected to stay at 1.3% in 2013, 1.1% in 2014 and 1.3% in 2015.
  • 13:42 Inflation expected to remain at current levels in upcoming months.
  • 13:43 Inflation expectations are firmly anchored.
  • 13:45 More details will be published as of now.
  • 13:46 Subdued underlying growth in M3 Money Supply, to 1.4% in October.
  • 13:47 Money growth comes mostly from outside and not from within the euro-area.
  • 13:48 Weak loan dynamics are still seen due to a variety of reasons.
  • 13:49 Long period of low inflation. There’s no mention of the D word (deflation), so EUR/USD is on the rise.
  • 13:50 Questions begin
  • 13:51 Is inflation really climbing?
  • 13:52 The decision to cut rates has been fully justified. Forward guidance is working.
  • 13:53 Bond yields have gone down in a variety of instruments.
  • 13:54 Core CPI is expected to rise in the horizon of the forecast.
  • 13:56 Meeting minutes discussed.
  • 13:57 As Draghi doesn’t hint any new monetary policy, EUR/USD is on the rise.
  • 14:00 There was a brief discussion on the LTRO.
  • 14:03 Draghi wants to make sure that the LTRO will be used for the real economy.
  • 14:05 Fundamentals of the euro area are strong thanks to a correction of mistakes made in the past.
  • 14:06 Low growth is the outcome of lack of structural reforms.
  • 14:07 Economies nee to be prepared for stimulus to have a real effect.
  • 14:09 Question about the exchange rates: the exchange rate is important for price stability and growth. We are watching the exchange rate, but it is not a policy target, just part of the information set.
  • 14:11 Progress in Portugal has been very very good.
  • 14:14 We have a powerful artillery for more action. The subsequent events after the rate cut have proved it correct.
  • 14:15 Inflation expectations remain fully anchored. Our monetary policy decisions are taking time to have an impact.
  • 14:16 LTRO is considered in context of practicality: impact on the real economy. This is complex.
  • 14:19 ECB opinion has been circulated about NCB structure.
  • 14:20 On SMP sterilization: marginally touched in the meeting – awareness that liquidity creation and absorption work in environment of full allotment. We are still reflecting on this issue.
  • 14:24 Euro-zone today is different than Japan in the 90s.
  • 14:26 We acted because we are aware of the downside risks.
  • 14:26 We stand ready to act.
  • 14:28 AQR needs credibility to work.
  • 14:35 Are you considering a small cut in the deposit rate? No sense in having a discussion on another policy move today.
  • 14:37 The sooner the supervisory board is in place, the better.
  • 14:38 AQR is a complex thing.
  • 14:39 Press conference ends

The next big event in the markets is the US Non-Farm Payrolls. See how to trade the NFP with EUR/USD.


The ECB surprised with a rate cut in November to combat inflation, but was not expected to act now. However, falling inflation raised expectations for hints to further stimulus in early 2014.

For more, see the EURUSD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.