The Day So Far
Visible evidence of ‘Draghi fatigue’ in asset markets today following his typically dovish speech at Euro Finance Week this morning. Echoing his memorable speech in July 2012, this time he promised “to do what it needs” to restore Eurozone inflation to 2%. The euro briefly sank against the dollar, falling back to yesterday’s lows, before popping back toward the 1.07 handle, while equities largely shrugged their shoulders, consolidating after a very strong rebound from the post-Paris Monday lows. As I suggested in the strategy following his last speech, a great deal of further monetary policy divergence has been priced into this currency pair before the crucial December meetings and we may need to wait until 3 ECB deliver on promises of further stimulus. As such, look for a sideways range in most currencies until we draw closer to the big events next month.
Crude remains vulnerable this morning, looking to close the week on a negative note, repeatedly testing the $41.30 level; a break of this level open up a test of the yearly lows and could take equities with it.
The Afternoon View
Data on the light side this afternoon, we are really scraping the barrel when we highlight the EU Consumer Confidence survey at 15:00 BST as tradeable data. Look for some profit-taking in equities this afternoon, aided by continued weakness in crude and consolidation in currencies.
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