The ECB was out today with a statement of doing nothing (in the face of analysts hoping for more QE following earlier movements by the ECB and the last-week whopper by the BOJ). But… crickets on the market.
Then, 45 minutes later, Draghi starts talking and doing another “whatever it takes” spiel (I’ve lost count of these), and the USD/EUR falls by 1% in 30 minutes. Stocks are levitating on the news as well, so I guess things are looking good for the time being. Kuroda Haruhiko apparently has problems with analyst confidence in the BOJ when he is the main mouthpiece on close votes for or against deflation-fighting easing when the Japanese market is balancing on deflation, and then Draghi goes and talks down the euro by a percent the week after on no action by the ECB. I guess this too will fade, since there probably needs to be more done.
I expect to see the euro trading very much weaker to bad fundamental news (bringing stocks in the opposite direction) until Draghi actually announces QE, and conversely seeing euro gains on good news and stocks falling correspondingly. It’s been the trade du jour in Europe for a while, there is nothing to me that speaks of traders reversing their outlooks with Draghi being the man with the mouth in financial markets at the moment.