8:30am NY Time ECB Chairman Trichet Press Conference
ACTION: N/A
We’ll be listening to ECB (European Central Bank) Chairman Jean-Claude Trichet releasing official ECB Interest Rate Statement along with a brief Q&A Session… Here is an overview of the situation:
Trichet usually delivers an official statement along with a Q&A session 45 minutes after the official rate decision at 8:30am. This press conference is usually very volatile and the market is always looking for clues from Trichet’s tone over future monetary policy directions. If Trichet is hawkish over the future of EURO, namely talking about exit strategey and possibility of rate hikes, then we will see EURO gaining across the board; however, if Trichet is dovish, focused on how slow the recovery might be and also on the issues over the imbalances of recovery within the members of EURO Zone, we’ll probably see EURO trade lower against other currencies… Furthermore, Trichet will never tell you what you want to hear… therefore you need to listen between the lines and keep an eye on the market for confirmation.
Fair Warning: If you have never traded this release, it is better to stay out of the market. Wait until around 9:30am~10:00am NY Equity open, then follow the trend. If Trichet is hawkish or being optimistic, then EUR/USD will gain throughout the session and may even carry over to Friday. Therefore there are plenty of opportunities to trade after the market has already established itself.
This Press Conference is usually done in 2 parts, the first part is a written statement which various newswire services will release headlines immediately at 8:30am, then Trichet will read through the statement; 2nd part of the press conference is a Question and Answer session where Trichet will take questions live from onsite media members. This part is highly unpredictable as Trichet may hint the market and drive prices intentionally. As I once heard from someone who knows Trichet personally, that there is never a slip-of-tongue with Trichet, he does everything intentionally.
However, Trichet is pretty good in maintaining a neutral stance, but sometimes market may read too much into his statements and move excessively… so once again, if you have not traded this release before, best to stay out.
Trichet may be addressing the debt issues with Greece today, or he may very well decide skip it all together… Trichet may also mention that rates would be kept at 1.00% until 2011 (bearish for EUR), but he may also mention that global economy is normalizing, easing the global imbalances rhetoric during his Jan. 11th comment. Those will be the comments I’ll watch out for. Overall I expect Trichet to be somewhat neutral.
Here are some recent Trichet Comments:
- Reiterates that anchoring inflation expectations is critical for economic recovery
- Calls on banks to continue consolidating balance sheets and improve risk management
- Believes US authorities are concerned about excessive risks
- Have to remain cautious on economic developments
- Euro Zone recovery to be sluggish
- Reiterates that the ECB has a ‘steady hand’ policy and no clear need to change its exit strategy
- Believes US authorities are concerned about excessive risks
- Have to remain cautious on economic developments
- Euro Zone recovery to be sluggish
- Reiterates that the ECB has a ‘steady hand’ policy and no clear need to change its exit strategy
- Economic recovery still seen as frail…
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