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The answer to that question is being shown by the direction of the EUR.   Growth, or lack thereof wins.  

While the market got excited after the ECB kept rates on hold and traders anticipated the details of the ECB bond program, called “Monetary Outright Transactions”, and brought the EUR up to just under the strong resistance level of 1.2650, once the ECB president mentioned that the ECB had cut their growth forecast to -0.6% to -0.2%, which is lower than the previous forecast of -0.5% to -0.3% that had been forecast in June, the EUR was sold off to its current levels around 1.2580-85.

Guest post by  Matthew Lifson, Foreign Exchange Trader,  Market Analyst of  Cambridge Mercantile Group.

The “MOT” will focus on the secondary sovereign bond market and President Draghi reiterated that it was important to deal with “severe distortions” in the bond markets.   The bond purchases will only have purchases of up to three years, and that there would be no seniority over private creditors.   There will also be no limits set on the amount of bonds purchased.   President Draghi also said that troubled Euro Zone countries could choose either a full bailout or a precautionary programs as a means of getting assistance.

 

As the press conference continues, it seems as if traders are reacting to every sound bite.   Will this be enough?   Can this program reverse the problems in Spain and Italy?   Only time will tell.   There are still further hurdles ahead including the German Constitutional Court decision next week but for the moment it seems that President Draghi has calmed markets somewhat.

 

Chancellor Merkel and PM Rajoy of Spain are meeting at the moment, so their comments could have affect on the currency.

 

We shall see.   Oh, and don’t forget, tomorrow is the US NFP release as well as unemployment number which should keep traders on their toes for the rest of this week.

 

Until the next shoe drops,