ECB Post-Meeting Press Conference

ECB President Mario Draghi is set to hold the post-meeting press conference at 8.30 am ET, when he is expected to drop hints regarding the future course of action against deflationary risks.

"While Draghi will no doubt pay lip service again to his policy artillery, he may choose to keep the powder dry for now," Capital Economics Chief European Economist Jonathan Loynes said. "But the pressure for the ECB to act again seems likely to build quickly."

The central bank was widely expected to maintain status quo this month after Draghi told the German weekly Der Spiegel last week that there was no need for immediate action. He also suggested that low inflation remained policymakers' biggest worry.

"The determination to fight any deflationary tendencies has never been higher than currently," ING Bank Senior Economist Carsten Brzeski said.

"As a strong exchange rate looks as the most imminent threat, we still think that a negative deposit rate would be the ECB's first line of defense if and when deflationary risks increase further."

Recent data indicate the sluggish pace of economic recovery amid deflationary risks and high unemployment. Further, credit growth and liquidity conditions remain weak.

Economic growth moderated in the third quarter to 0.1 percent from 0.3 percent in the three months to June, when the euro area economy exited its longest ever recession.

The recovery likely gained some traction in the fourth quarter of the year, economists say, citing recent data.

Inflation slowed unexpectedly in December to 0.8 percent from 0.9 percent in the previous month. The figure has held below the ECB's target of 'below, but close to 2 percent' for eleven months.

Figures released yesterday showed that retail sales grew stronger-than-expected in November, suggesting that consumer spending may have contributed positively to GDP in the fourth quarter.

However, unemployment remains unacceptably high. The figure has held steady at 12.1 percent for eight consecutive months.

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2014-01-09 13:30 GMT | [EUR - ECB Press Conference]

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EURUSD M5 : 84 pips price movement by EUR - ECB Press Conference news event :

Live Video Coverage of ECB Press Conference with Mario Draghi - January 9, 2014 [VIDEO]

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ECB President Mario Draghi will deliver his first live video press conference of the year today in Frankfurt, Germany.

Mr. Draghi finds himself in a unique position in the new year as he will have to convince market that he can continue to support economic recovery in the 18 nation bloc and at the same time conduct a review of the Eurozone's largest banks.

The risk is that banks would pull back even further on loans, confounding the already soft economic recovery, to avoid being ordered to raise more capital.

The ECB has left the benchmark rate unchanged at historic lows at .25%

Press conference following the meeting of the Governing Council of the European Central Bank on 9 January 2014 at its premises in Frankfurt am Main, Germany, starting at 2:30 p.m. CET:

• Introductory statement by Mario Draghi, President of the ECB.
• Question and answer session. Registered journalists pose questions to Mario Draghi, President of the ECB, and to Vítor Constâncio, Vice-President of the ECB.

European Central Bank President Mario Draghi reiterated on Thursday that the 18-nation economy is set to experience a protracted period of low inflation and asserted that the bank will maintain easy policy for as long as needed. "We may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 percent later on,"

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"No matter what the economic data is, the EURUSD is having a hard time falling. Actually, it is being bought on each and every dip and people wonder if it isn’t a wise decision to actually buy the pair and hold the position instead of shorting it. The EURUSD outlook looks bearish, though."

"EURUSD Bearish on Bigger Time Frames. The reason why the EURUSD is not falling (yet!) is not that the pair is bullish or something, but because the pattern that broke lower is on a big time frame: the daily chart."

the source

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