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Euro Slumps after Mario Draghi’s Press Conference

David Meyer

ECB Takes a Dovish Stance, Leaving Rates Unchanged

(Continued from Prior Part)

Major takeaways from the press conference

ECB (European Central Bank) President Mario Draghi held his scheduled press conference about 45 minutes after yesterday’s interest rate announcement. Below are some of the key takeaways from the conference:

  • The key rates remain unchanged and are expected to remain at present levels or lower in the short term.
  • Draghi acknowledged the risk of low growth in emerging economies.
  • The ECB will consider a review in its March meeting, by which time more data will be available.
  • Low oil prices resulted in a further decline in the inflation outlook as compared to December.
  • Draghi reiterated that the ECB has the power and is ready to implement further easing measures if necessary.

Euro movement after the press conference

The euro-to–US dollar currency pair fell sharply after the press conference. The currency pair went to a low of 1.08 before bouncing back toward the middle of the day to 1.09. The markets initially reacted to the dovish comments from Mario Draghi, but later in the day the rise in crude oil prices resulted in a slight rebound.

Impact on the market

In terms of yesterday’s performance of currency-based ETFs linked to the euro, the ProShares UltraShort Euro ETF (EUO) rose by 0.25%. EUO is inversely linked to the euro. In contrast, the Guggenheim CurrencyShares Euro Trust (FXE) has a direct relationship to the euro. FXE fell by 0.05%.

The German ADRs (American depositary receipts) trading on US exchanges saw mixed results. SAP (SAP) rose by 0.6%, Deutsche Bank (DB) fell by 3.9%, and Belgian beverage maker Anheuser-Busch InBev (BUD) rose by 0.58%.

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