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European Central Bank (ECB) President Mario Draghi will refrain from using language that could potentially excite markets in his speech this Friday
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Loading...European Central Bank (ECB) President Mario Draghi will refrain from using language that could potentially excite markets in his speech this Friday at the economic symposium in Jackson Hole having been scarred by his recent experience at another central banking conference in Portugal, say analysts.
Bond yields and the euro surged following Draghi's remark at the Portuguese resort of Sintra in late June that "all the signs now point to a strengthening and broadening recovery in the euro area." The president's ECB colleagues were subsequently compelled to spend several days qualifying and walking back his comments to calm nervous traders.
President Draghi will therefore be mindful of saying as little as possible given that market reaction, Simon Derrick, chief currency strategist at BNY Mellon, told CNBC's Squawk Box on Monday.
"He's going to say nothing at Jackson Hole," opined Derrick, adding that this strategy may not, however, be enough to help with the ECB's concerns over the euro's recent buoyancy.
Further indications that Draghi will stick to the script on Friday can be found in perfectly transparent recent messaging from the region's central bankers, according to Peter Chatwell, head of euro rates strategy at Mizuho.
"Moreover, the ECB took the unusual step of stating that Draghi's speech on Friday will be on the topic of the Symposium 'Fostering a Dynamic Global Economy.
Expectations that the ECB president may deliver market-moving news this week is partially due to widespread anticipation of an upcoming reduction in monetary policy support given the strengthening indications of a regional economic recovery over the course of this year.
The euro has strengthened by just shy of 12 percent against the U.S. dollar so far this year.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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