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After the European Central Bank left the rate unchanged, its president, Mario Draghi, will meet the press. He could issue more warnings about the economic situation in Europe, and could hint about future steps.

His words usually move the euro. Live Blog.

Highlights

  • Economy remains weak.
  • Recent signs don’t show improvement
  • Since the OMT announcement, there has been some improvement: return of flows from US money market funds.
  • OMT is ready for use.
  • Not satisfied with financial conditions.
  • Fiscal consolidation has been amazing.
  • No OMT without conditionality

Live Blog

13:10 GMT. EUR/USD is at 1.2740, all times are GMT. Conference starts at 13:30.

13:12 The pair reached a low of 1.2719 earlier in the day and almost touched 1.2780 on the topside.

13:14 Germany reported a drop of 3.4% in exports in September (year after year). Spain had an OK bond auction.

13:22 EUR/USD now sliding to 1.2730. You can watch the event here.

13:25 US jobless claims are also published at 13:30 GMT.

13:30 US jobless claims 355K, better than expected. Trade balance at -41.5 – smaller deficit than expected.

13:31 Press conference begins.

13:32 Draghi begins talking: energy prices are high, and taxes are rising.

13:33 Inflation is expected to fall in 2013. Inflation firmly anchored.

13:33 Economy expected to remain weak – EUR/USD touches new 2 month lows.

13:34 Governments must continue with reforms and financial sector restructuring.

13:34 “We are ready to take OMTs, therefore reducing extreme scenarios”.

13:35 Economy contracted in Q2 after flat in Q1. Most recent data does not signal  improvement.

13:36 Pace of recovery remains “dampened”. Data looks to the downside.

13:36 With modest economic activity. Current inflation to remain transitory.

13:37 EUR/USD recovering to 1.2735. Monetary expansion remains subdued.

13:38 Draghi details about M1, M2 and M3. In general he says that banks are getting stronger in some stressed countries.

13:40 EUR/USD now at 1.2730. Resilience of banks needs to be strengthened.

13:41 Improvement is seen in reducing unit labor costs and current account balances. Consolidation efforts are bearing fruit.

13:42 The ECB takes note of the EU Summit decisions, towards a banking union.

13:43 Questions begin.

13:43 Were interest rate cuts discussed?

13:44 There is a projection of a weaker economy. Regarding rates, “we discussed everything”, but decided not to cut. No real hint there.

13:45 Since the OMT announcement, there has been some improvement: return of flows from US money market funds.

13:46 Other improvements also noted since the OMT announcement. EUR/USD above 1.2740.

13:47 Target2 has stabilized. Conditions are considerably easier now.

13:48 Ready to act with OMT.

13:49  The ball is in the court of the governments.

13:50 We are not pleased with the economic conditions. We are repairing the monetary policy transmission mechanism.

13:52 EUR/USD rising to 1.2745.

13:53 Draghi reiterates the conditions for using the OMT – asking for aid.

13:54 Draghi welcomes the Greek vote. Says there is another one on Saturday, about the budget.

13:55 Tough question about the “revolving door” ELA funding for Greece.

13:56 ELA is not monetary financing. Following events in Cyprus.

13:57 Question about gold movements from a German reporter.

13:58 Answer: No matter what time span we look at, inflation looks very well anchored.

13:59 Improvement in current account balances.

14:00 What about the “bending of collateral rules”?

14:01 Draghi answers that it was a mistake, being investigated, and that he’ll keep us posted.

14:03 About deflation – it’s self sustaining. So far, there are no signs of deflation.

14:03 Price behavior is in line with medium term objectives.

14:04 Monetary policy is already very  accommodative. EUR/USD returns to 1.2745 after moving higher.

14:05 What about the ECB profits on Greek bonds – up to the governments.

14:06 How much are these profits? I don’t know.

14:08 Inflation risks are broadly balanced: high unemployment and subdued activity on the downside, and the VAT hikes and oil prices are on the other side.

14:09 Since the LTRO was enacted, money is actually flowing to Europe and no inflation is seen.

14:11 EUR/USD sliding again. No OMT without conditionality.

14:12 Household debt is relatively low in the euro-zone. Fiscal consolidation has been amazing.

14:16 What about an exit strategy?

14:17 We look at price stability and this will determine price stability.

14:18 Draghi discusses gender concerns. EUR/USD stabilizes in the meantime.

14:20 There has been substantial progress, but the task isn’t finished – on the fiscal consolidation path and on the structural reforms ground.

14:25 Draghi talks about small changes to banknotes. The important part of the presser is over. EUR/USD is at 1.2730.

Background

The ECB’s last big move was in September, when it detailed on the OMT – a program to buy bonds, conditional on countries asking for an aid request. The ECB already discussed it in August, but Spain is no hurry to move.

A new report says Spain will not ask for aid at least until the end of the year.

Draghi recently said that so far, Germany has been insulated from the downturn, but that this is changing now. This, together with talks about deflation, led to speculation about a rate cut. Draghi didn’t cut the rates, but could hint about it.

Further reading:  5 Reasons Why Greece Could Leave the Euro-Zone After the US Elections