Market Snapshot – Euro Strengthens as Draghi is Hawkish

Draghi Hawkishness Helps Euro Skyrocket

Draghi doesnt spill many beans during his speeches but when he does, it is enough to rock the markets. He usually does not touch upon monetary or economic policy in his speeches but sometimes he does and thats what make his speeches very tricky to trade. There are many dull speeches interspersed with market changing ones. And the usually bearish Draghi has started being hawkish of late and this has helped the euro immensely. We saw evidence of that once again today as the euro shot up on hawkish comments from Draghi where he gave his firmest indication that the ECB is beginning to think of tapering the QE as yet. This is likely to be supportive of the euro in the short term.

Its All About the Speeches Today

It is all about speeches from the central bank leaders as of today as we have Draghi, Carney and Yellen all lined up to speak today. Draghi has been hawkish while Carney has been mainly neutral and it remains to be seen what Yellen would come up with today. The data from the US has been a bit iffy of late but still the Fed had gone ahead with the rate hike this month and Yellen would want to justify that for now. It remains to be seen whether she says anything supportive of the dollar or whether she chooses to not upon monetary policy at all.

Gold Prices Volatile

Gold prices have been surprisingly volatile today as it bounced off the support from the 1240 region and reached above the 1250 region during the course of the day. But we believe that this bounce is likely to be shortlived and the downtrend is likely to resume pretty soon and we are seeing it already as the prices have started moving downwards as of this writing.