Europe Today all eyes and ears were trained on Mario Draghi at his European Central Bank press conference, the ECB left rates on hold at 0.25% as expected so it was left to central banker rhetoric to move markets. In the press conference Draghi said that the Eurozone will see “prolonged low inflation” and in a nod to quantitative easing said “The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate in order to cope effectively with risks of a too prolonged period of low inflation.” He then acknowledged in the Q&A afterwards that that the council specifically discussed QE. The discussion obviously did not follow through to practice. When questioned over whether the recent drop in CPI has affected his outlook for prices, Draghi’s answer was essentially no. The reason given was the late Easter that caused unusually low price growth for March and he predicted could result in a bigger increase in prices for April. While completely logical, this answer does have a slight whiff of ‘cold weather’ about it. Just like the weather has had ‘some’ impact on US economic numbers, Easter will have had ‘some’ effect on European price changes, the size of the effect is debatable. There were the typical gyrations expected during the speech as markets tried to digest the overall theme, eventually markets followed the trend of the last two weeks notably with the Dax moving higher and the euro lower. By using the ‘Easter’ excuse, Draghi essentially left markets with the status quo and pushed back the need to explain the ECB’s inaction towards low inflation until next month. US The surprise event of the session was a US trade deficit way below expectations at -42.3bn. This could put the GDP growth for Q1 2014 closer to 1% than the 2.6% seen in Q4 2013 and potentially has huge implications for US markets. Stock markets have been brushing off recent bad data as weather-related, safe in the knowledge that growth is steady above 2% and the economy is adding jobs. If GDP growth were to slow to 1%, one pillar of the US recovery has severe cracks. This adds extra weight to tomorrows US unemployment report as should that miss expectations then the 2nd pillar would be wobbling too. ISM Non-manufacturing matched its manufacturing counterpart narrowly missing expectations. Despite potential data headwinds, the market is still pricing in a good jobs number tomorrow as the weather has improved in March. As such the Dow Jones Industrial Average has made a new all-time intraday high for the first time in 2014. FX With the ECB rate-setting, the euro was in focus today. At one point the single currency was up 40pips during the announcement but eventually fell through 1.3750 support touching 1.37. The US dollar was up against most counterparts. One exception was USDCAD perhaps on the back of Canada’s better than expected trade surplus compared with the deficit miss seen by the US. Commodities Gold was lower today as another possible candidate for money-debasement did not materialise with the ECB’s inaction. Gold is perceived as a store of value and the devaluation of the euro would likely have boosted the precious metal. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.