• Draghi Fails To Make Our Day
• Never The Twain!
• Clear As Mud

Well, it was Mario’s big moment – and he blew it! Or rather, given the build-up, almost entirely engendered from his own rhetoric last week in London that the ECB would do "whatever it takes" to save the euro, in the event, what Mr Draghi must’ve meant by that is it extended no further than passing the buck to Europe’s politicians.

Speaking of which, even as I write, the single currency is losing 0.25 percent on charts at 1.2194 against the buck; as dead cat bounces go, forex traders are already trying to cast their minds back to a bigger squelch!

My old mate Neal Kimberley of Thomson Reuters tells me he has a horrible feeling that this lack of beef is going to backfire on Mr Draghi. “I sense a lot of folks have lost a lot of money this afternoon,” he grumbles. “They will be far less likely to take Mr Draghi’s words at face value in the future,” says Kimberley, who gets into his stride – following up on the BBC’s Robert Peston-inspired Clint Eastwood analogy – with: “If you are going to act like Dirty Harry, you need to make sure you have bullets in your Magnum 44. Mr Draghi hugely raised expectations that today’s ECB meeting would deliver a “shock and awe” set of measures.  The early part of his speech was promising. But where’s the beef? Sorry this is a bit Shania Twain… it don’t impress me much!"

For once, Draghi-watchers – ForexSpace.com among them – have been a bit startled to witness the usually unflappable and measured euro-technocrat-in-chief in today’s press conference acting a tad agitated and looking like a man defeated. Perhaps not surprising, since he’d just emerged from a meeting with Jens Weidmann, head of the Bundesbank. If nothing else, we’ve seen today who really is the king of the castle! Indeed, as I’m now hearing across the markets, a consensus is coalescing around the notion that what Super Mario said last week in regard to the ECB doing whatever it takes, today seems it was more like they’ll do whatever the Bundesbank allows them to!

As Kathleen Brooks, head of research at FOREX.com comments: “The ECB seems to have been dictated by the German Bundesbank. The head of the Bundesbank said in comments during an interview in late June that the ECB can’t over-step its mandate, and also that it can do less than some governments think it is capable of. It added that the German central bank was the largest in the Eurozone and thus had a bigger say than others,” says Brooks, “presumably Greece or other bailed out nations.”

Given the uncertainty that will have given the markets little if any succour today, we shall surely see an even bigger reversal tomorrow once the various players absorb this lack of new information. Which simply isn’t good enough. And with the Fed also perceived earlier to be ‘sitting on its hands’, it highlights the fact that September looks to be shaping up to be the most crucial month in global monetary policy history.

Meat On The Bones

Drilling into the detail, President Draghi did concede the ECB Governing Council had decided to keep the main interest rate at a record low of 0.75 percent at their August monetary policy meeting. During the press conference, he commented on the considerations underlying the decision, saying that the idea of a rate cut was discussed, but ultimately not fulfilled. Draghi also ruled out negative interest rates, and cast doubts whether the central bank should sterilize purchases. Regarding a banking license, he insisted the authority on the matter belongs to the sovereigns instead of the ECB.

Towards the end of his press conference – just before the live feed mysteriously died a death (conspiracy theorists beware!) – Mr Draghi was questioned as to what he meant by his earlier comment containing the phrase ‘the euro is irreversible’? Treating the audience to one of his infamous wry smiles, Draghi said it means that it ‘cannot be reversed’! As the assembled journos chuckled nervously, Super Mario added: “It stays, it stays, it stays. It’s pointless to bet against the euro, it’s pointless to go short on the euro.”

Which is as clear as mud.

Drew Hillier. Editor, ForexSpace.com