Eurozone: ECB Press Conference 1.30pm 12\8\2016

Tadhg Gaelach

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#1
From Ransqualk.com

Description:

The ECB Press Conference occurs eight times per year and runs for about an hour. It has 2 parts; first a prepared statement is read by ECB President Mario Draghi, which is later available on the ECB website, then the conference is open to press questions. The questions often lead to unscripted answers that create heavy market volatility. The press conference is webcasted on the ECB website with a slight delay from real-time. The ECB Statement and Press Conference is the primary method the ECB use to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, such as the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

Summary:
The primary focus surrounding today's ECB Press Conference will be whether the ECB decide to increase the duration of their current QE programme, which is currently scheduled to run until March 2017. Current consensus is for an extension of 6 months with QE maintained at €80 billion per month, however, other alternatives suggested include an extension of 3 months with the intention to reassess in June, an extension greater than 6 months with regular assessments (likely every quarter along with ECB forecasts), or even a extension of QE at a lower rate of only €60 billion per month (effectively tapering).

In addition to the announcement of any extension of QE, the ECB would likely need to announce new measure in order to avoid bond scarcity. The most likely options include deviating from the capital key, an inclusion of regional debt in order to increase the number of potential issuers; or alternatively, allow purchases below the deposit rate.

45 minutes before the ECB Press Conference will be the announcement of the ECB's Minimum Bid Rate which is expected to remain unchanged at 0.00%. Although unlikely, if the ECB were to announce an increase in its Asset Purchase Programme (APP) and Targeted Longer-Term Refinancing Operations (TLTRO) this would likely be announced alongside the Minimum Bid Rate.

Expected Market Reaction:
Providing there are no surprises announced along with the Minimum Bid Rate, the focus will remain firmly on the ECB's Press Conference with expectations for an extension of the ECB's QE programme. Given overall consensus is for a 6-month extension, an extension less than 6 months with an overall optimistic tone would likely result in EUR strengthening across the board, especially if the ECB were to announce tapering (although this is seen as highly unlikely). An extension of 6 months or longer, along with an overall cautious economic outlook from the ECB would likely result in EUR weakening across the board.
 
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Tadhg Gaelach

Tadhg Gaelach

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#2
The ECB state that asset purchases are to continue until March 2017, and from April 2017, will reduce asset purchases to EUR 60bln/month
 
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Tadhg Gaelach

Tadhg Gaelach

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#3
EU Marginal Lending Facility (Dec-08) 0.25% vs. Exp. 0.25% (Prev. 0.25%)
 
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Tadhg Gaelach

Tadhg Gaelach

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#7
Anything exciting being said or just run of the mill stuff?

Nothing new. The journos are pressing him about whether the possible reduction in bond buying means the ECB is teparing its QE activities, Draghi denies this and says the ECB will still be very much in the market pushing for higher growth \ inflation. Also being pressed about the damage zero interest rates is doing to financial institutions. Draghi says he's very aware of these difficulties. Now saying that he is working to make monetary union across all EU states more complete. Lol. some journo suggesting that Draghi is biased to Italy's interest. All in all, more of the same BS.
 
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Tadhg Gaelach

Tadhg Gaelach

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#8
Saying EU states need to "converge" i.e. all have the same monetary and fiscal structures. What a dreamer!
 
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Tadhg Gaelach

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#9
Now saying we need educational, legal and electoral reform! Mustn't like what us ignorant plebs are telling him at the ballot box :(
 
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Tadhg Gaelach

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#10
Conference over now. Euro dropped all the time Draghi spoke. Trying to pick itself up off the floor now. Bit of a drag really :cool:
 
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