The euro was practically unchanged against the US dollar today, having leapt late yesterday afternoon after leaks from a press conference in Brussels.
ECB president Mario Draghi was supposed to be holding an ‘in camera’ (ie secret) meeting with EU officials yesterday, but news slipped out, causing the euro to spike higher. The rumours suggested that Mr Draghi was looking at buying three-year government bonds from peripheral nations, and that he did not consider this to be direct financing of governments. This is the German view, and is a big no-no, but it appears Mr Draghi views the situation differently. No German denunciation has yet been forthcoming, so we will wait and see whether he can slip this in at the ECB meeting this week.
Meanwhile, with 48 hours to go until the ECB meeting, traders seem content to sit on their hands and await developments. It remains to be seen whether Mr Draghi can bring the Germans and other northern Europeans on side with his plans, but if he can the future looks brighter for the euro.