Draghi: "Sell The EUR" Wink, Wink, Nudge, Nudge

Tyler Durden's picture


With EURUSD having lost over 2 handles since Draghi began to speak at the press conference, we thought it worth examining just what he did (and did not) say. As Citi's Steven Englander notes, for the ECB it was a twofer.  They can claim they are not engaging in currency wars while giving a big wink and nod on monetary policy ease that says 'sell my currency'.  Yesterday when they said they were not too worried about currency, they didn't mention that they would sound very dovish on liquidity and monetary policy and stress the EUR's level  as a factor in inflation and economic forecasts. So while they did not do the currency war thing, they did the next best thing.


Via Steven Englander, Citi,

In fairness, I suspect that Draghi was surprised at how many people in the market walked away from the January press conference with the view that the ECB was the 'hawk' among G4 doves. The comment last month that there had been no discussion on a cut was interpreted as saying the door was closed, while this month he indicated that while there was no cut discussion, they were discussing how to keep liquidity maintained, encourage positive convergence etc. Although the EUR sell-off was associated with a bit of a risk pullback, it actually was driven by the opposite.


Here was another G4 central bank discussing downside risks and the need to keep major monetary contagion in place. Indirectly he was addressing EUR strength.  I doubt that he wants to pull back positive contagion but did want to pull back view that ECB  was somehow endorsing a tightening of monetary conditions. The combination is actually bullish asset prices, not bearish, even if it unwound weak EUR longs.

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Fri, 02/08/2013 - 09:26 | 3225500 LawsofPhysics
LawsofPhysics's picture

down a couple cents, scary. < sarc off >

Fri, 02/08/2013 - 09:28 | 3225505 Ivanovich
Ivanovich's picture

Seriously.  Someone nudge me when it crosses 1.30.

Fri, 02/08/2013 - 09:42 | 3225537 trav777
trav777's picture

ZOMG, so i can't haz panic?

Fri, 02/08/2013 - 09:46 | 3225542 GetZeeGold
GetZeeGold's picture



Not so much panic as it is a sense of disbelief.

Fri, 02/08/2013 - 09:57 | 3225569 fomcy
fomcy's picture

Keep dreaming, EURUSD $1.40 before $1.30, afterall who is buying/printing $1 trillion per year?
So? EUR will recover even faster then you imaging.

Fri, 02/08/2013 - 09:31 | 3225510 ParkAveFlasher
ParkAveFlasher's picture

All those dukes and duchesses and counts and barons and such love them a strong currency.  Screw it if the peasants can't afford meat sans maggots.  Lots of cheese and wine molding over in caves for the long term slog.  In the meantime, they can snap up Ford Mustangs and Lucky jeans conveniently priced in Bennybux.  Nicely equipped.

Fri, 02/08/2013 - 09:43 | 3225539 knukles
knukles's picture

Do as I say not as I do for I have your best interests at heart, peasants.


Welcome to the New Versailles.
Oh, the castle you see in the distance... no further, serf.

Fri, 02/08/2013 - 09:57 | 3225571 LawsofPhysics
LawsofPhysics's picture

I am confused, are these peasants not being paid in euros?  As you point out, if the euro is strong, they can afford a lot of things priced in dollars, or yen, or yuan etc.  Are you saying that meat isn't being purchased from the U.S. or brazil or mexico?  I call bullshit on that as we have sold lamb to the E.Z. this year.

Now, as for those American peasants...  

Fri, 02/08/2013 - 12:20 | 3225979 ParkAveFlasher
ParkAveFlasher's picture

"Payment" connotes "employment" and in any case, last time I checked, the average salaryman doesn't arrange his own sovereign swap facilities, himself, with nations, and is largely at the whim of whatever regime controls the flow of money and pees down the trickle path to the unwashed masses.  France has plenty of the unwashed, make no mistake, and will soon enough have plenty more.

Fri, 02/08/2013 - 12:28 | 3226006 ParkAveFlasher
ParkAveFlasher's picture

And once more, although the archdukes and baronesses may feast on fine American lamb, the natural consequence of a too-strong currency is the vacancy of goods production for export.  It starts on the periphery- discretionary and luxury goods- and very slowly at first and then BANG you can only afford to build in China.  The firm I work for has vacated Paris HQ for Geneva (taxes) and will soon close factories in French-speaking regions.  Europe is headed for the Socialist shitter and they won't even have geography to save them.

Fri, 02/08/2013 - 20:18 | 3227671 thisandthat
thisandthat's picture

Actually meat isn't being purchased from the US, since the US insists in turning their cattle into walking pharmacies, so the EU rather pay WTO's fines than allowing it in (or at least that was so, last time I checked).

Fri, 02/08/2013 - 09:30 | 3225507 Dr. Engali
Dr. Engali's picture

Yeah yeah sell the Euro trash..buy it back at 1.27...blah blah we know the deal.

Fri, 02/08/2013 - 09:48 | 3225548 spastic_colon
spastic_colon's picture

in the mean time paint the futures tape, we all know that ES will be up today just look at the euro markets.  US markets will open with a flurry of currency, futures etc pump and ramp to stay green into the close

Fri, 02/08/2013 - 09:32 | 3225515 scatterbrains
scatterbrains's picture

Brent caught serious wood off all his teasing

Fri, 02/08/2013 - 09:38 | 3225526 SheepDog-One
SheepDog-One's picture

Fucking outright piracy and complete monetary and market manipulation now treated like political banter....'What's he gonna say they're gonna do NEXT man what did he HINT at!"

Unreal...these people should all be getting arrested by interpol, and we just sit and marvel at their wordsmithyness.

Fri, 02/08/2013 - 10:04 | 3225553 Orly
Orly's picture

You got it, dog.  It's a travesty of the first order.

From Englander above:

"I doubt that he wants to pull back positive contagion but did want to pull back view that ECB  was somehow endorsing a tightening of monetary conditions. The combination is actually bullish asset prices, not bearish, even if it unwound weak EUR longs. "

There is no way the take-away could have been what we saw yesterday because it should have been bullish for Euros.  What a sad joke.

Fri, 02/08/2013 - 09:38 | 3225530 trendybull459
trendybull459's picture

Small model of Centrobank Debut in Israel,this is just a model what is going everywhere,so,read and think how they decided to kill us:


Fri, 02/08/2013 - 09:53 | 3225558 GetZeeGold
GetZeeGold's picture



Well there's a small ray of sunshine.

Fri, 02/08/2013 - 09:41 | 3225535 SheepDog-One
SheepDog-One's picture

BULLISH for asset prices! YAY!

Fri, 02/08/2013 - 09:40 | 3225536 Downtoolong
Downtoolong's picture

I bet he told Goldman Sachs what he really means. Shit, they probably told him what to say.


Fri, 02/08/2013 - 09:48 | 3225547 Orly
Orly's picture

There was a clear and decisive, global effort to sell Euros.  There was no way an "unchanged" interest rate policy evoked that kind of response.

This was done to show the Japanese who was the big boy in the sandbox.  Next week, there will be a co-ordinated to sell yen and on and on it will go.  Like a bunch of little kids playing around with the world economy.

I can't play the ant in the land of the giants, so be it known that until such time as this idiocy goes away and there is some real stability in the foreign exchange markets, I will be out.

Me and a bunch of other retail traders, I'm sure.  It's a shame, really.


Fri, 02/08/2013 - 09:57 | 3225566 Ricky Bobby
Ricky Bobby's picture

Orly - Welcome to Galt's Gulch.

Fri, 02/08/2013 - 10:07 | 3225589 Orly
Orly's picture

Do y'all have margaritas and indoor plumbing?  If so, I'm in.


Fri, 02/08/2013 - 10:00 | 3225576 ArkansasAngie
ArkansasAngie's picture

And ... it keeps germany's exports going out the door.  Don't worry.  Ben told him it was OK.

It's America's non-elites who get to waller in non-economy some more

Fri, 02/08/2013 - 11:44 | 3225889 Stuntgirl
Stuntgirl's picture

Aw, Orly, you're out?

I thought you were holding up pretty well, even in the bullshit pool...

I immediately thought of you When I saw the Euro dump yesterday.

Well, I hope you still post your thoughts on FX, I look for your comments when in doubt.

Fri, 02/08/2013 - 13:47 | 3226327 Orly
Orly's picture

I like the technical aspects of it, you know.  I can read a chart.

The thing is, all this insanity doesn't play to my sense of fairness, nor does it lend itself to why I am trading in the first place: to weigh the chart, the technicals and the fundamentals and have a go at logic.

What makes me angry is that the entire market has been debased to an arena for gambling and, believe it or not, I don't gamble.

It really makes me angry that this can happen for absolutely no reason whatsoever.  Just so someone can show someone else who's the boss.  Little boys on the playground kind of stuff.

After I blow off some steam, who knows?  We'll see.

Thank you for thinking of me, though.  That was nice.


Fri, 02/08/2013 - 09:52 | 3225557 orangegeek
orangegeek's picture

Euro daily looks ready for wave 3 down.





Fri, 02/08/2013 - 10:00 | 3225579 fomcy
fomcy's picture

yeap, down to 1.40 :)

Fri, 02/08/2013 - 10:22 | 3225627 Orly
Orly's picture

Exactly.  Go figger...

Fri, 02/08/2013 - 10:06 | 3225586 Inthemix96
Inthemix96's picture

Draghis head needs removing from his shoulders.

That would stop the bulshittery and comic awareness for a while, fuck, he is a lizard man after all, so another one would promptly grow back, wouldnt it?

Fri, 02/08/2013 - 10:44 | 3225701 gould's fisker
gould&#039;s fisker's picture

Are they still letting Mario "the Count of Paschi" Draghi do banking stuff? Terrific choice to lead a faux central bank.

Fri, 02/08/2013 - 11:00 | 3225720 falak pema
falak pema's picture

Roller coasters at disneyworld. You guys comment every rise and every fall like it would be the last one.

Its just a game and Draghi plays the whole gamut of psychological pranks to reassure then reawaken the market. The whole Manichean thing based on psuedo market ethics : fundamentals vs conjecture, deflaton vs inflation, CB independence vs political pull etc. etc.

His official spiel is grooved to a T; behind that, he plays on emotion : hope and despair, loose money euphoria and tight money austerity. 

Thats what being a TOP political player is when the world is so murky its all a game of false mirrors.

Welcome to land of Lady from Shaghai of Orson Welles. 

Meanwhile back at the Euro Ranch they have just come up with a  pluriannual EC BUDGET deal that should make the world laff! 

Its 960 billon promised and 906 Billion E committed; try figuring that out! Cameron wins and Hollande saves face!

Merkel the go-between on this. But...its the Euro parliament that will decide if this great Follie Bergere budgetry splits is kosher or heresy.

If they say NO its back to square one again. So never despair of unbelievably clever stupidity when Van Rompuy is in the chair! 

L'Europe en passe d'adopter pour la première fois un budget en baisse

Fri, 02/08/2013 - 11:29 | 3225848 DUNTHAT
DUNTHAT's picture


For those you need to know what's going on with the EURO ----



Pretty obvious this sucker is going back to 1.60

Fri, 02/08/2013 - 12:09 | 3225953 Just Ice
Just Ice's picture

Nah.  At least hope not as I've put on some euro shorts over last two days.

Fri, 02/08/2013 - 12:22 | 3225983 DUNTHAT
DUNTHAT's picture

Good Luck.

I'm a Long term trader 6 mo to 1 year

Otherwise you get all caught up in the manipulation.

Capacities and other structurals can't be easily manipulated.  

Day trading is the manipulators dream client.

Fri, 02/08/2013 - 13:36 | 3226294 Orly
Orly's picture

If Euro goes to 1.40, that would mean Cable would also get to 1.42-ish, just to keep the DXY fairly steady.

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