Draghi’s speech
causes markets to shift

Erasing a week’s worth of gains in one fell swoop, the euro
tumbled yesterday following an ECB press conference.

With the interest rates and levels of quantitative easing up
for discussion, Mario Draghi announced a change in neither, yet the rates fell
sharply during his speech. The press conference did however reflect on the euro
zone’s poor performance, with a downward revision of the region’s growth
prospects sending the euro crashing.

Draghi’s speech
causes markets to shift

Erasing a week’s worth of gains in one fell swoop, the euro
tumbled yesterday following an ECB press conference.

With the interest rates and levels of quantitative easing up
for discussion, Mario Draghi announced a change in neither, yet the rates fell
sharply during his speech. The press conference did however reflect on the euro
zone’s poor performance, with a downward revision of the region’s growth
prospects sending the euro crashing.

Draghi also announced that the euro zone would keep the
interest rates at 0.75%, however comments that his committee was split over
whether or not to lower the rate intimated that a future drop could be in
order, this too provided downward pressure on the euro.

In comparison Mervyn King’s speech was extremely dull, with
little insight into the future movements of the Bank of England, resultantly
sterling made no significant moves.

Already this morning, further backlash from the ECB press
conference has caused the euro to weaken, whilst the risk aversion has resulted
in investors running for cover in the dollar which has consequently
strengthened.

Today Draghi speaks once again, though the impact of his
words is unlikely to be as strong as yesterday. Manufacturing production in the
UK is expected to fall into contraction, whilst German industrial production
and US unemployment data are also announcements to look out for.

Today’s Key
Announcements:

• 09.30am – GBP – Manufacturing Production m/m: expected down
  at -0.2%
• 09.30am – GBP – Consumer Inflation Expectations
• 10.00am – EUR – ECB President Mario Draghi Speaks
• 11.00am – EUR – German Industrial Production m/m:  expected at -0.4%
• 13.30pm – USD – Non-Farm Employment Change: expected down at
  90k
• 13.30pm – USD – Unemployment Rate: expected to remain at
  7.9%
• 14.55pm – USD – Prelim UoM Consumer Sentiment