EurAnalysis

Apparently the word is that the agency directors were abducted by aliens

Looks like risks for tomorrow could be thought of in the following context:

Deflation Panic Meter: The last two inflation prints have obviously shown a clear decline in prices across the eurozone, a significant amount of which is due to lower energy costs. If Draghi dismisses the recent declines in prices as necessary for Eurozone rebalancing, or simply says the eurozone is not facing any serious threats of deflation, this could be seen as less proactive on fighting deflation (hawkish). I will be listening closely for any comments regarding the aggregate EZ inflation figure not telling the story of how bad the actual situation is in the periphery economies which are basically already very close to 0% inflation.

NOV INFLATION:
Eurozone: 0.9%
Germany 1.3%
France: 0.6%
Italy: 0.6%
Spain: 0.2%

Inflation Forecasts: Using the ECB’s inflation forecasts for 2014 and 2015 they can communicate to markets where they think inflation will trend from here. Given the last two months of price declines they will likely cut inflation forecasts, the question is how much. If inflation estimates are cut drastically that will reflect that the ECB intends to enact new policies to push inflation back towards target levels.

Deflation Fighting Tools: I’d give a high probability that the very first question is what will the ECB to fight deflation. However Draghi answers this question is probably the most important part of the meeting. Each tool, whether it is negative interest rates, QE or and LTRO has been denied or refered to as an emergency measure by one ECB governing member or another. If Draghi himself legitimizes one of these measures during a press conference I think the market will begin to take the new ECB easing cycle much more serious.

Taper Risk: There could be questions regarding tapering risks. Whatever is said may be less of a factor today but be very important for Friday’s NFP. EUR was already the worst performing G10 currency in the wake of the ADP jobs beat, and ECB cautiousness about tapering risks will only increase the EUR specific sensitivity from increased chances of Fed tapering. If Draghi is seen to be very attentive to risks to Eurozone bond markets from Fed tapering, I expect the impact of a strong NFP will be exaggerated specifically on EURUSD.

FX Risk: They will ask him about the high EUR, and he will likely say the FX rate is not a policy tool outside of the context of its impact on inflation. However in February he did say the FX rate was too high, so who knows what he will say tomorrow. Its unlikely he uses direct FX jawboning as his earlier comments on liquidity policy should do the trick if the goal is to get the EUR down tomorrow.

I bet Draghi today will manage to hammer Euro. Another rate cut is unlikely, but there are on the table also "unconventional tools". We'll see!

what is in this report

The UK OBR (Office of Budget Responsibility) is forecasting 2014 as another negative to very slow growth for the Eurozone as a whole.
So, it will be very interesting to see if the ECB staff economists come up with the same forecasts.

improving data from region and big resistance from GER resulted in no cut in interest rates, as expected. EUR unchanged. There are still risks Draghi could say something during press conference which might bring the drop together with good data from US. GDP forecasted at 3%. So i wonder why we still at the current level? Why EUR didn't shoot up with no-rate cut? I'm long temporary but now i want to get out from long as it ddint shoot up.

because there was no rate cut expected

That could explain why it didnt drop, but i was wondering why it didnt rise once rate-cut was crossed-out? I'm glad i was able to get out of long position just before sudden drop. This drop occured becasue of:

1. H4 pinbar like candle
2. RT @MichaelSedacca: Lockhart calling for timetable for tapering QE in speech in Florida


or both?

sick numbers from US

Blow out US GDP number at +3.6% vs +3.0 expected vs +2.8% prior.
Also blowout 298K Jobless claims number vs 328K expected.

Can you say December taper. All we need now is a 200K+ NFP tomorrow.

Closed the remainder of my 1.6242 G/U long position

Now looking for a daily close below 1.6345 and I'll be looking to sell rallies with a 1.6080 initial target.

As for E/U. This is a "wait for Draghi and see" situation.

just reading that makes me nervous tempted to keep my shorts but logic says to be sidelined

Did you go long USDCAD you are spoiling the party

Did you see the CAD data? It wasn't me mate.

I know, I know I'm just stirring the shit

Looks like it was a nice opp to reload your longs anyway

Im long

Or now could be an even better time, although I want to see a close above 1.0670 before tomorrow!

Whats the target harpe! 1.08?

1.0750/70 area should do it, and then sell the hell out of it.

I have 1.08 as a weekly Fib level well it may be just under it However the weekly candle currently forming doesnt exactly inspire me to go long see how tomorrow plays out but we may have got our rejection at 1.07 and thats our high. Time will tell indeed