ECB Sticks With Strategy

There were not high hopes for new action from the ECB and they were not disappointed.   Policy was left as it is with a negative 20 bp deposit rate/.   The weaker than expected April US Empire manufacturing survey (-1.19 vs 6.90 in March) helped break the euro's downside momentum.  It had poked through $1.07 in North America yesterday after the US retail sales report disappointed and had fallen back to $1.0570 in the European morning.   It moved back above $1.06 but without much momentum as Draghi spoke and continues to straddle that area.  

Draghi made four points, none of which are surprising:

1.  The cyclical recovery in the euro area has strengthened.
2.  The asset purchase program has been successful
3.  It will continue until September 2016 at least or a sustained increase in inflation.  The program is flexible.
4.  The ECB is not experiencing operational difficulties in conducting the asset purchases.   Concerns about bond scarcity is "premature."

In response to a question, Draghi noted that the ECB has continued to support Greek banks through ELA, which it is wiling to do provided the banks are solvent and they have collateral.  The ECB's exposure is 110 bln euros, which is most relative to the country's GDP. 

It is difficult to call a press conference that was interrupted by a protester was a non-event, but in terms of policy and outlook, there is no meaningful increase to investors' information set.