Ok, so Mario Draghi is of course on the tape and the FX market is watching this closely because, well, because the euro has continued to surge in the new year thanks to a confluence of factors including, but not limited to, upbeat data, hawkish minutes from the ECB’s December meeting, news that China may be set to diversify further away from USD assets, and of course Steve Mnuchin’s efforts to drive the dollar lower. Here’s an annotated chart:

EURUSD

This presents a conundrum for the ECB, which of course tapered APP to €30 billion/month starting in January and looks increasingly likely to call an end to it in September despite this line from today’s statement:

If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the asset purchase programme (APP) in terms of size and/or duration.

So as the euro continues to surge and positioning becomes more one-sided, the market wants to know if Draghi is going to try and talk the euro lower.

Well if he’s trying, it ain’t fucking working. Here’s the headline from the presser:

  • DRAGHI REINSTATES WARNING EURO VOLATILITY CREATES UNCERTAINTY

    • More specifically, Draghi said recent volatility in the exchange rate “represents a source of uncertainty which requires monitoring with regards to its possible implications for the medium-term outlook for price stability.” In other words, the ECB needs to keep an eye on this, lest it should derail in the never-ending quest to get inflation back to target.

    “Downside economic risks continue to relate primarily to global factors, including developments in foreign exchange markets,” he added.

    Apparently, that passing nod to the risks inherent in a stronger euro was not enough to convince anyone that he’s serious because the single currency moved sharply higher:

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