ECB Trichet Press Conference 09/03/09
8:30am (NY Time) EU Trichet Press Conference
ACTION: EUR/USD BUY (Hawkish) SELL (Dovish)
Trichet will deliver a statement along with a Long and Boring Q&A session after. This press conference is usually very volatile and the market is always looking for Trichet’s tone for future ECB policies. If Trichet is hawkish, then we will see EURO gain, if Trichet is dovish, then we will see EURO losing against all other currencies.
If you have never traded this release, it is better to stay out of the market. Wait until around 9:30am~10:00am 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 slip up and cause the market to react.
Usually Trichet is pretty good in maintaining a neutral stance, but sometimes market may read too much into his statements and move excessively. Currently ECB is struggling with uneven recoveries between its member countries, while only Germany and France are showing strong signs of recovery, most other member countries are on the brink to collapse… Trichet will have to dance around between being optimistic and being realistic. The market will obviously read between the lines… so once again, if you have not traded this release before, best to stay out.
UPDATE: Trichet reiterated his recent rhetoric while mantained neutral in his Q&A session. While the market was looking at discussion of the unwinding of the stimulus or unconventional measures, Trichet stated that when the time comes, and now is not the time, ECB is not pre-committed to any particular plan, but will act swiftly and immediately. Most pre-market movement of pricing in this release in the EUR/USD pair quickly pared off as Trichet was able to maintain ECB’s stance.
Overall Trichet didn’t slip and/or push the market to one way or the other… He was so careful with his wording that it almost seems he was testifying in front of the parliament or something… EUR will probably remain directionless for the month to come. The end result is a No Trade, but overall we were able to understand ECB’s stance over the long term outlook of EURO, which is probably no rate hike for about a year, or at least until the 2nd half of 2010.
