ECB Tumbles On More Draghi Verbal Intervention

Moments ago, Draghi made sure all the downside stops in the EURUSD were taken out when out of the blue, during a discussion following prepared remarks at LUISS, he confirmed what the ECB said last week: namely that the 25 bps cut is just the beginning.

  • DRAGHI SAYS ECB ARE TO EXAMINE EU DATA IN THE NEXT WEEKS AND IS READY TO ACT AGAIN
  • ECB READY TO ACT AGAIN IF NEEDED, DRAGHI SAYS
  • ECB MONETARY POLICY IS TO REMAIN ACCOMMODATIVE

This follows his earlier comments that the ECB can't subsidize government through buying bonds (only through trillions repo equivalents apparently), which means more whispers of a negative deposit rate are coming to a rumormonger near you.

The EURUSD reaction was instantaneous:

What is more surprising is that so far the "bad news is good news" algo hasn't woken up and sent the DJIA back over 15,000. After all this is just the bad news the market needed to price in even more easing from the ECB which will do nothing at all for the 60% youth unemployment in the periphery and everything for the 1%.