Draghi Hints At Cuts

EUR

The single currency struggled yesterday after European Central Bank President Mario Draghi said they could cut interest rates again or provide further asset purchases if inflation doesn’t reach its target. Speaking at the ECB Forum in Sintra, Portugal, Draghi gave a defiantly dovish tone, saying that if the economic situation deteriorates in the coming months the bank would announce further stimulus. Draghi said The ECB foresees “lingering softness” in the short term, in particular, due to geopolitical factors and trade conflicts, which have weighed on exports and on the manufacturing sector.

Earlier this month, the ECB revised its interest rate expectations, adding that its first rate hike since the crisis is unlikely to come before mid-2020. This stance shows the central bank is doubtful about economic recovery in the 19-member region.

USD

Following the comments by Mario Draghi, US President Donald Trump accused the European Central Bank of unfairly manipulating the euro, further raising the stakes for Washington in its trade and diplomatic disputes around the world. In a tweet, the president suggested the comments made by Draghi had triggered an immediate slide in the value of the euro versus the dollar, “making it unfairly easier for them to compete against the USA”. Reopening a spat over transatlantic trade with the EU Trump warned Brussels it had been “getting away with this for years, along with China and others”.

Key Announcements

09:30 – GBP: Consumer Pricing Index expected to decrease to 2%
15:00 – EUR: ECB President Draghi Speaks
19:00 – USD: FOMC Economic Projections
19:00 – USD: FOMC Statement
19:00 – USD: Federal Funds Rate
19:00 – USD: FOMC Press Conference