Markets await signs of concern from Mario Draghi on the euro
An economist with Deutsche Bank has found a way to gauge how concerned Mario Draghi might be about the euro.
As Mark Wall points out, the ECB president has commented sparingly on currency swings since taking office in 2011.
While his predecessor, Jean-Claude Trichet, gained some notoriety for calling out currency appreciation as brutal, there was no mention of the exchange rate at roughly two-thirds of Draghi's press conferences following Governing Council meetings.
Yet the 69-year-old Italian has developed a signalling system for currency markets and his appearances in Lindau, Germany, and Jackson Hole, Wyoming, on Wednesday and Friday might offer him a chance to deploy it after the currency's almost 12pc gain this year.
"If he needs to say something, of course he will - but given where the economy and markets are, he does not need to go against the Council's wish to avoid pre-committing," Wall said. So what are the words to look out for when Draghi steps to the podium this week?
He could always play it cool - say the euro is being driven by the forces beyond his control and leave it at that.
Going further by describing the exchange rate as being "important'' for growth and inflation would point to his awareness of the problem, Wall says. But there is way to ratchet it up if need be.
Draghi could call the currency "very important" for growth and inflation, although in the past that usually happened when the euro was around $1.30 or higher, Wall says.
But to telegraph real stress, Draghi would have to use the phrase from October 2015, when he characterised the exchange rate as having "significant" consequences for the economy, including the "de-anchoring of inflation expectations."