The Euro Bounces After Jean-Claude Trichet Says Two Magic Words

Photo: ECB

Fires are raging in Europe today, with stocks tanking and yields widening once again.All eyes this morning have been on the ECB due to the fact that A) it’s decision day and B) it may be the last saviour for Europe’s troubled sovereigns.

At 7:45, as expected, there was no change in policy rates.

Then at 8:30, Trichet held his press conference.

He didn’t make a ton of news. He’s clearly dropped the “strong vigilance” language (no rate hikes coming soon). He also talked about further liquidity programs.

The one thing that traders like: The words “bond buying.”

He said programs to purchase peripheral debt were never dead, and may continue, and just like that, the Euro found its floor for the day, and things stabilised. In fact, there’s talk that the ECB is in there today buying peripheral debt right now.

They’ve done this before. It doesn’t work easily, but it’s something for now.

If Trichet is going to save the markets, he’s not ready to announce yet. Clearly the pressure is back on EU leaders to ramp up its bailout funds, and get them moving.


Original post: With fires in Europe raging, all eyes are on the ECB which announces its latest rate decision today.

The actual rate announcement (at 7:45 ET) isn’t expected to be newsworthy. Update: Yep, no change to interest rates…

The real “news” comes at 8:30, when Trichet gives his post-decision press conference.

Pressure is growing on him to be the saviour -of-last-resort for Italy, Spain and the rest.

One thing we don’t expect to hear: The words “strong vigilance” with regards to inflation, which is code word for more hikes on the way.

We’ll be covering all the action LIVE.

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