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Trio Markets Broker EU
Number of messages : 11
Points : 518
Date of Entry : 2016-07-20
Year : 32

TRIO MARKETS - ECB PREVIEW

on Thu Jul 21, 2016 2:55 pm
About Draghi
Draghi is by far the most charismatic and intelligent central banker in the world at the moment. He achieved to save the Euro and bring confidence back into Europe during the 2012 turmoil whereby he declared that he will do ‘’whatever it takes to save the Euro’’
 
What to expect and where to focus
When trading, the Central Banks decisions are important in order to measure market expectations. For this meeting, it is almost certain that Draghi will not adopt new stimulus however, markets hope that he will give a signal if he will act or not in the upcoming September meeting. Moreover, markets wait to hear Draghi’s opinion about Brexit and Italian banks. In any case we should widely expect a dovish Draghi. The dovish tone of Draghi’s speech could possibly present a good trading opportunity.
 
Early signs of market movements and possible scenarios
The day started with a ‘risk on’ tone until BOJ governor Kuroda mentioned in an interview that, ‘’there is no need or possibility for helicopter money’, the market reaction was rapid. The Yen skyrocketed while global equity indices started to erase earlier gains. Keep in mind that if Draghi disappoints the markets by refusing the need for extra stimulus within the next few months or erase hopes for ‘helicopter money’, he will be the second central banker who disappoints markets within a day. If this scenario takes place, it will be a shock for the market which has recently invested too much hope and capital for additional easy monetary policy from the central banks. The impact for stocks will be negative whilst the Euro and Jen will gain.


Risk
Holding trading positions (particularly euro pairs, euro stoxx, DAX) before/during the ECB announcements/press conference is risky and the volatility can be excessive and could potentially damage your account. It is recommended to start trading at least after the first 2-3 minutes of Draghi’s speech when he will give the basic directions of his monetary policy plans while you observe market reactions carefully. Do not rush to trade as most of the time, the next day (Friday) presents better trading opportunities while the volatility drops.

Sincerely, 

Trio Markets
ECN/STP Broker 
https:/triomarkets.com/
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