There was nothing noteworthy or new about the ECB's statement today, which means that antitipation for the Draghi press conference is building. The key takeaway from the press conference for us will be how Draghi justifies his "hawkish" talk in Sintra late last month when he mentioned the word "reflation" and euro bulls ran with it. Considering there are still no signs of reflation and the ECB's statement is still as dovish and QE-supporting as ever, will Draghi backtrack?
Does this mean that EUR/USD should fall back to where it was before Draghi's utterance around 1.12, is this exactly what the ECB wants? The answer will be known within in the hour.
While FX traders are acting like there is no chance of a September taper announcement and rushing in to sell the single currency, equity traders are being more cautious just in case Draghi does hint that a change is coming to the APP programme. The Dax has yet to capitalise on the euro weakness and hasn't managed to climb back above today's highs, however, if Draghi sticks to the dovish mantra and ditches talk about "reflation" then an uptick in European stocks is likely.
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