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Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 12:45 GMT, followed by the press conference at 13:30 GMT. The meeting is to be held in Frankfurt.
Current policy measures
- Deposit facility rate at -0.40 percent
- Refinancing rate 0.00 percent
- Marginal lending facility rate at 0.25 percent
- ECB buying assets at €80 billion per annum, which to include corporate debt securities.
- ECB has launched four new TLTROs.
- In December, ECB announced an extension to its current monetary policy.
- From April this year, ECB would purchases assets in the tune of €60 billion per month.
- Under the new rule, assets can be bought at yields below the deposit rate.
Expectation today
- European Central Bank (ECB) is expected to maintain its current policy.
- However, it is widely expected that the ECB would wind up assets purchase further at upcoming meetings.
What to watch out for –
- ECB’s take on the recent spike in inflation and market expectations of further tapering.
- ECB’s take on Greece debt restructuring. IMF said won’t join Greek bailout without debt relief. Rumors suggest that EU might move ahead without IMF.
- Does ECB leave the door open for further interest rate cut or the next move to be a hike?
- Concerns with regard to Italian banks and call for deeper deficit reduction.
- Does China pose any major concerns?
- What are the major risks for Eurozone in 2017?
Impact
The euro is down since the Republican candidate Donald Trump secured a victory in the US election; however, staged a recovery as the dollar weakened on Trump’s “too strong” comments.
We have forecasted that the euro would first reach 1.01 against the dollar, then drop below parity and finally drop to as low as 0.96 against the dollar. We recommended going short in the Euro at the then current rate of 1.116. However, we have warned our readers that the euro bulls are trying to reclaim 1.11 area. Key resistance for them is around 1.086. The euro is currently trading at 1.066 against the dollar.
