Update 3: After a busy day in Sintra, Mario Draghi has apparently found time to rebut President Trump's accusations. In comments to the press, the ECB president defended the ECB's approach to telegraphing policy decisions and insisted that "we don't target the exchange rate."
- DRAGHI: PROTRACTED UNCERTAINTY IS A MATERIALIZATION OF RISK
- DRAGHI: BE 'CRYSTAL CLEAR' THAT OUR INFLATION AIM IS SYMMETRIC
- DRAGHI SAYS `WE DON'T TARGET THE EXCHANGE RATE'
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Update 2: President Trump has apparently shifted from currency manipulation to stock market manipulation, something that we've said is more than a little ironic, given the Fed's equity pumping legacy.
German DAX way up due to stimulus remarks from Mario Draghi. Very unfair to the United States!— Donald J. Trump (@realDonaldTrump) June 18, 2019
In a tweet, he specifically complained about the DAX's gains on Tuesday, accusing Draghi of manipulating stocks higher, even as US stocks followed Europe higher.
Somebody should tell him you're not supposed to say the quiet part loud.
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Update: Trump isn't letting this go, and is now attacking Draghi because European stock markets rallied on Draghi's stimulus remarks, which isn't "fair" for the US.
European Markets rose on comments (unfair to U.S.) made today by Mario D!— Donald J. Trump (@realDonaldTrump) June 18, 2019
Now, how long will it take for Trump to tweet about bund yields at new all-time (negative) lows?
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President Trump wasn't thrilled by this morning's selloff in the euro, and for the first time, is lashing out at ECB chief Mario Draghi, accusing him in a tweet of intentionally manipulating the value of the shared currency with his stimulus talk.
Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.— Donald J. Trump (@realDonaldTrump) June 18, 2019
Earlier, Mario Draghi sent the euro tumbling and German yields to record lows when he said that rate cuts or more asset purchases could be part of the central bank's toolkit for fending off a recession.
Jerome Powell might be breathing a sigh of relief now that another central banker has, at least temporarily, taken his place in Trump's cross hairs. However, we would urge him to wait for the inevitable part II later this week, where Trump slams the Fed for not cutting rates or being sufficiently dovish during this week's meeting, which would have the added benefit of weakening the dollar, or part III, where Trump announces that he's retaliating by moving ahead with those auto tariffs (or perhaps Mexico-style blanket tariffs), sparking a trade war with the EU and Japan (even though the administration had earlier kicked the can 6 months down the road).
In theory, of course, this could risk setting off a vicious cycle.
The final race to the bottom:— zerohedge (@zerohedge) June 18, 2019
1. ECB unveils more easing
2. Trump threatens ECB, responds with Eurozone tariffs
3. ECB unveils even more easing
One reporter pointed out the irony of Draghi blaming Trump's trade war for the ECB's decidedly more dovish stance, then Trump attacking Draghi over it.
So, Trump hits the economic outlook, forcing Draghi to consider more stimulus, and then Trump accuses Draghi of manipulating the currency. Have I got this right?— Katie Martin (@katie_martin_fx) June 18, 2019
The euro spiked following Trump's tweet.