The Single European Currency had an ultimately very poor day on Thursday, finishing lower against every major currency, even though at one point during ECB President Draghi’s Press Conference, it caught quite a bid lifting EUR/USD half a cent from 1.2155 to 1.2205. It was only after the event was over that the EUR then fell sharply, tumbling all the way to a low in New York of 1.2100; its weakest since January 12th. AUD/EUR moved up to 0.6240 with NZD/EUR at 0.5835.
Commenting about the European Central Bank’s interpretation of the recent softer than expected run of economic data, Mr Draghi said, “The bottom line of this discussion is in my view, it’s basically caution in reading these developments, caution tempered by an unchanged confidence in the convergence of inflation to our inflation aim.” He pointed to temporary factors such as bad weather, the early Easter timing and strikes but had to acknowledge the slowdown was widespread across EU countries and sectors. “The interesting thing is that we didn’t discuss monetary policy per se,” he said. “It’s quite clear that since our last meeting, broadly all countries experienced, in a different extent of course, some moderation in growth or some loss of momentum.”
Draghi’s comments that exchange rate volatility were not discussed at the Council Meeting were initially taken as a signal to bid the EUR higher. However, and making a mockery of the whole process, the usual anonymous ECB sources were quoted on newswires after the Press Conference had finished saying policymakers were keen not to upset investor expectations for a gradual withdrawal of the ECB’s monetary stimulus, despite some concerns about the state of the economy. Policymakers remained comfortable with the policy path priced in by investors, the sources said. The EUR opens in Asia today at USD1.2100, AUD/EUR0.6240 and NZD/EUR0.5835.