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Draghi wasn’t his usual downbeat self during his latest testimony, with his relatively upbeat remarks on inflation spurring a pop higher for the euro.

The pound stalled from its climb as it took a few more Brexit-related jabs throughout the day but managed to hold on to most of its earlier gains. Meanwhile, the dollar wobbled slightly on political headlines but also ended positive.

  • Canadian wholesale sales up 1.5% vs. projected 0.4% uptick
  • Belgian NBB business climate index up from -0.3 to +1.2 vs. -0.5 consensus
  • ECB head Draghi: Tighter labor market led to shortages in some areas
  • Draghi: Pickup in wage growth and domestic cost pressures to continue
  • Draghi: Broad-based economic expansion ongoing
  • U.S. Deputy Attorney General Rod Rosenstein to step down?

Major Events/Reports:

Draghi’s testimony

In the absence of major economic releases during the session, all eyes and ears were mostly on ECB head honcho Draghi’s speech before the European Parliament Economic and Monetary Affairs Committee in Brussels.

Market watchers took note of his more upbeat take on the jobs situation and particularly on inflation. Draghi highlighted the tightening labor market how this is resulting to shortages in some areas. He also mentioned that wage growth will likely continue, leading to rising domestic price pressures.

With this in mind, Draghi pointed out that even though headline inflation figures have been cruising at current levels, there has been “a relatively vigorous pick-up in underlying inflation.” 

Of course this improved inflation outlook has already been reflected in the ECB statement and updated projections earlier on, but euro bulls likely jumped on the emphasis by the main man himself.

Rosenstein to resign?

Some jitters from U.S. political drama came into play as headlines reported that U.S. Deputy Attorney General Rod Rosenstein was on his way to the White House. This fueled rumors that he would announce his resignation before the Donald could even say “You’re fired!”

Rosenstein oversees the special counsel investigation into Russia’s alleged involvement in the 2016 U.S. elections. Many worry that his likely replacement might make matters all the more complicated for the Mueller probe.

Later on it was clarified that the actual meeting between Rosenstein and Trump would be on Thursday.

Risk appetite appetite falters on tariffs

Even though risk-on flows kicked into high gear after trade measures announced by the U.S. and China last week turned out softer than expected, there were some notable wobbles in the market as the tariffs kicked in on Monday.

  • Dow 30 index fell 181.45 points to 26,562.05 (-0.68%)
  • S&P 500 index is down 10.30 points to 2,919.37 (-0.35%)
  • Nasdaq is up 6.29 points to 7,993.25 (+0.08%)

Crude oil, however, managed to scrape some gains as the OPEC refrained from increasing output to keep a lid on prices.

  • WTI crude oil  is up to $72.28 per barrel (+2.12%)
  • Brent crude oil advanced to $81.47 per barrel (+3.39%)

Major Market Mover(s):


The shared currency enjoyed a sharp move higher thanks to Draghi reiterating the ECB’s more upbeat inflation outlook. However, it promptly returned most of these gains as traders must be feeling anxious ahead of Italy’s budget release.

EUR/USD popped from 1.1763 to a high of 1.1815 then retreated to 1.1744; EUR/JPY advanced from 132.45 to a high of 133.06 then slipped to 132.45; EUR/GBP pulled up from .8935 to a high of .8981 then fell back to .8961.


The dollar had a mostly positive run during the session, even as it wobbled on headlines suggesting that Rosenstein might leave his post.

USD/JPY hit a low of 112.43 then advanced to 112.84; GBP/USD fell from 1.3151 to 1.3111; USD/CHF climbed from .9580 to a high of .9650; and AUD/USD slipped to .7253.


The franc crawled down to the bottom of the forex heap as traders might still be easing up on their positions after last week’s SNB jawboning or moving their risk-off holdings back to the dollar.

CHF/JPY sank from 117.36 to 116.96; AUD/CHF advanced to .6994; CAD/CHF is up from .7407 to .7448, and GBP/CHF is up to 1.2651.

Watch Out For: