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ECB President Draghi caught a hawkish looking Euro trade in his press conference after hinting at stronger EuroZone growth only to stay the course, no rate hike chatter which saw a three week high followed by a reversal to new lows.

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Draghi Rat Trap Gets The Euro Bull MOMO Traders Again

EURUSD traded up to 1.2422 and down to 1.2324, ERGBP and EURJPY also fell. Heading into NFP tomorrow it is hard to say how much of this is unwinding but siuffice to say under 1.2300 many books will be negative. The Draghi tone is much the same with a hint to instability he said global risks include financial deregulation, if one deregulates then the risk is others follow.

With regards to Italy he said "we view EZ as a whole, not individual countries" and Draghi says policy continues to remain reactive rather than proactive. A relevant comment with the trade war talk from politicians around the world.  

Mario did his best to snipe at trade war talk but did say "Would not call recent exchanges on trade a war yet there is a worry about international relations tariffs have effect on foreign exchangeand confidence if you put tariffs on allies then who are your enemies? " An obvious pointed reference to across the pond.

Draghi with his initial bullish words and then deflation garble effetively spun EURUSD around at least for the morning. He also referenced downside risks include FX. The ECB does not want a higher Euro just now and the Economic forecasts of subdued inflation is reference to that FX risk.

Interesting Draghi said the missing statement text on QE must be taken in context  saying the missing statement sentence was first introduced in 2016 so all in context. "It does not signal change in expectations or reaction function decision to remove was unanimous." There was also little discussion over other possible changes. We get the feeling that the ECB wants to leave well enough alone ahead of all the trade talk and upheaval over in mighty America.

Trade Smart

KnovaWave @knovawave

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