ECB Disappoints

All those who continue to forget this trading maxim were royally punished on Thursday morning as the ECB could not match the trading enthusiasm built into the move in shorting the Euro and thus going long the US Dollar for the prior 7 weeks lead up into the ECB Monetary Policy Decision.

This is such a strong trading maxim to buy the rumor, and sell the actual news that it is the exception rather than the rule where an event over delivers. The best move is to take profits the day before the event as opposed to getting crushed on the news which happened today in the Euro and US Dollar forex trades. Literally the amount of crushing that some traders took this morning regarding giving up a month`s worth of profits in an hour is stomach churning.

Eurozone Economy & Growth

If one looks at the uptick in economic numbers the Eurozone economy is outperforming the rest of the world including the US on a relative basis since the devaluation program pushing the Euro Dollar Cross from the 1.40 area to the 1.05 level that began 17 months ago by Mario Draghi.

This has been a concerted effort to devalue the Euro by Mario Draghi, namely against the US Dollar and Japanese Yen to some extent. This is why many countries continue to do this practice because for the short term to medium term it is an effective tool to make currency related gains that juice up the economic numbers; at least from an artificial currency standpoint.

Currency Wars Work in the Short Term

It helps tourism, and this is a mainstay of European revenues, and the Eurozone has definitely benefited from being more affordable to tourists due to a much weaker currency. It also helps German cars be more competitive from an exports standpoint, especially when previously they were getting hammered by the Japanese Yen devaluation program that started before Mario Draghi. The BMW Lexus pricing dynamic of two years ago has definitely shifted and become more favorable for Germany. It also helps European exports become more affordable and competitive around the world. Of course, these are all artificial short term currency fixes that don`t address the real drivers of economic growth from a structural long term perspective.