Question: Monsieur Sarkozy recommended that the ECB publish the meeting. What is your position? The same as last year, I imagine, but probably…
Trichet: First of all, I am not sure at all that this is the position of the Head of State of France. I saw that in a paper, but referring to a conversation with aides. I myself do not comment on rumours or leaks that are not confirmed. The publication of minutes would be a paradox because the last resolution of the European Parliament (on the ECB) mentions that the European Parliament understands why we are not publishing minutes. They ask us to be as transparent as possible; they ask, in particular, that, in this candid exchange that we have, we be even more transparent. I try to be as transparent as possible, as you know, and we are proud that our predecessors, Wim Duisenberg and Christian Noyer, gave us – to Lucas Papademos and me – the concept of this interaction, because it did not exist before the setting up of the euro, as you are aware. There was no central bank in the world engaging in immediate, real-time communication after the decision of the Governing Council. So, in terms of transparency we have been bold since the very beginning of the euro. And we continue to try to be exemplary in this respect, as this interaction is demonstrating. But again, the European Parliament said that they understood why we were cautious as regards the publication of minutes.
Question: Just a quick question. After this press conference investors will have certainly priced out any possibility of a rate increase this year and early next year. Are you comfortable with that? Can you comment on that?
Trichet: We have no bias. We are never pre-committed. We do always what is necessary to deliver price stability in the medium term.
Question: Going back to the collateral rules. You say you will let us know because you are very transparent. Is there a possibility that you will let us know before we see you next month? And how soon can we expect….
Trichet: I have said no more today than what I said a month ago. So, do not assume anything, but see it as a reminder of the terms of reference that I have for this particular issue.
As a conclusion: I have seen a major shift in market sentiment and long term sentiment as USD continues its bullish run as of 8/8/2008.
Euro has broken major support area this week and is expected to head below 1.50 as ECB expresses major concerned over its economic growth (Trichet’s speech).
BOC is likely to keep rate unchanged or cut rate as the worst labor data was released in 17 years on Friday.
RBA is expected to cut interest rate and along with its pessimistic economic outlook, AUD is facing strong opposition in the coming weeks.
BOE decided to keep rate unchanged but my research yielded an overwhelming possibility for a rate cut before the end of the year. Sterling is also not looking good.
Overall I see the future weeks with USD continue to strengthen against all other currencies. Risk appetite may return as major monies move out of commodities and going back in equity market, thus boosting USD by default.
One Final Note: Most of these highlighted sections from the rate statements made by ECB, FOMC, RBA, etc… are pre-marked by newscasters and economists. They are released along with the actual statement as headlines. Sometimes the newscaster will even tell you that the central banker is being hawkish or dovish. You really don’t need to go through the entire statement to figure out what is happening. All you need to know are the headlines.
I use multiple news wire services, but if you are starting out, I would recommend Trade the news (tradethenews.com), they charge only $175 per month for Forex news and the broadcasters are very professional with their analysis. You’ll get the headlines for the speeches plus their on-the-spot review of the tone. This is just another reason why you should get a news wire service instead of using a free one provided by a broker or Forex website.