-Mario Draghi, European Central Bank President
American and Britain's markets suffered on Monday and amid a void of fundamental data, it can be a perfect opportunity for Mario Draghi to deliver his message. Tuesday morning every headline was about his speech, while market reaction was still muted. The single currency surprisingly rebounded around 10 pips and was changing hands at 1.3657. The conclusion of his speech is some sort of stimulus at central bank's next meeting in June. Market are already pricing in the potential move.
Amid his comments the President also mentioned that expectations for weak inflation may gain a damaging grip in the 18-nation bloc and spur companies and household to delay purchases further. During the conference in Portugal, Draghi also sent a strong signal that additional long-term loans to commercial banks can be a part of the stimulus package introduced on June 5. He also admitted that it can be late to introduce fresh stimulus, hence, any delay can have even more devastating effect on the economy. Markets, however, were expecting for a more detailed speech, as his comments still leave the door open to a package of measures that will be delivered next week. At the same time, ECB Governing Council member Ewald Nowotny's speech echoed with words expressed by Draghi, saying the central bank has to make sure that deflation expectations will not rise any higher.
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