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Date Posted: 00:48:11 09/06/12 Thu
Author: Charisse Bartoli
Subject: Can Draghi Deliver?

This morning, financial markets are on the rise ahead of today's big ECB meeting. Optimism is high after Draghi's proposals for new ECB activities were leaked yesterday. The main point is that the Draghi's bond buying program involves unlimited purchases of government debt, with no public cap on yields. The upshot is that this represents a significant change in the political landscape of Europe, with a move towards a central fiscal authority.
So why isn't the euro shooting to the moon? So far the leaked plans have not been formalised, with big questions yet to be answered, such as the exact nature of the conditionality of the bond purchases. The leaked details imply that the ECB is likely to stop buying the bonds of any government that fails to meet the conditions it agrees when it signed up for aid. As Thomson-Reuter's Michael Cartine points out, this could represent a significant moving of the deckchairs in European politics and right now there are no indications as to how the political details will work out.
Gold is the biggest winner this morning, with the precious metal up 0.68%, thanks to the dollar index dropping this morning.

The Australian dollar is the best performing currency as traders rediscover their appetite for risk, helped by better than expected Australian unemployment date. The euro is performing strongly, with the EUR/USD and other euro pairs up around 0.15%. At 11 we have Germany factory orders with a rise to 0.3% expected. At 12.00 we have the latest MPC rate statement, with no change expected. The main events are the 12.45 euro rate statement, where no change is expected, with the important press conference at 12.45. ECB president Draghi speaks at 17.30. From 13.15 we have US ADP Non Farm Employment change, with unemployment claims at 13.30. US ISM non manufacturing figures are released at 15.00. With so much riding on today's ECB statements, president Draghi cannot afford to put a foot wrong. How markets will react and quite what Draghi will reveal in terms of specific details is anyone's guess. In this case it may pay to follow a stable trading adage of buying the rumour and selling the news.

A good way to play this on BetOnMarkets.com might be a LOWER trade predicting that the EUR/USD closes below 1.2600 in 1 days time for a potential return of 110%.

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