8:30am NY Time ECB Chairman Trichet Press Conference
ACTION: N/A
We’ll be participating ECB (European Central Bank) Chairman Jean-Claude Trichet press conference today and he is going to be releasing the 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 is expected to be repeating recent rhetoric as the present market condition remains relatively the same from the last ECB rate decision meeting, which was back in January 14. 2010. However, here are some notable events or comments that took place in the past few weeks:
EU Commision has approved Greece’s Stability Plan
(EU) ECB’s Trichet: Euro Zone has diversity in a vast economy, much like the US; reiterates that no states will be leaving the EMU
(EU) ECB’s Bini Smaghi: Reiterates view that Greece leaving Euro Zone is unrealistic
(PO) ECB’s Constancio: Portugal in phase of recovery but next few years will be more difficult than previous thought
(GE) ECB’s Weber: More and more signs of recovery are being seen, recovery in Germany to remain moderate in 2010
(EU) ECB’s Mersch: ECB will continue with progressive withdrawl of liquidity, urges timely and gradual unwinding of support
(EU) ECB’s Trichet: Must ensure that there are no credit constraints in the economy, Banks must do their share to maintain lending to the real economy
(EU) ECB’s Tumpel Gugerell: Now is the time for monetary/fiscal policies to return to normal as tensions have eased
…and some market commentaries:
Therefore as a conclusion, Trichet might remain optimistically cautious over the economy. Obvious imbalances in membership nations exist in the Euro Zone, and by raise the bars too fast and too high, and second dip recession could happen.
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