ECB policy meeting preview

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 11:45 GMT, followed by press conference at 12:30 GMT. Meeting is to be held in Frankfurt.

Current policy measures-

• Deposit facility rate at -0.20 percent
• Refinancing rate 0.05 percent
• Marginal lending facility rate at 0.30 percent
• ECB started its asset purchase program of € 60 billion from March.
• ECB has indicated front loading the purchase, which means more bond buying in summer and adjust later on.

Expectation today -

• No change in monetary policy is expected today, however press conference is very vital, since it is the first after Greek deal is reached.

What to watch out for -

• Changes in growth and inflation forecast as hard data are improving across board. Most pivotal would be ECB's view on inflation. Higher forecast might strengthen yields further and might provide support to Euro.
  
  
• How concerned ECB is over Greek situation and if it's have an impact on policy decisions.
  
  
• ECB's take on latest deal offered to Greece.
  
  
• How unanimous ECB board over current policy.
  
  
• What tools ECB might have if Greek situation worsens.
  
  
• ECB's view on Euro.
  
  
• How ECB plans to manage the risk of ELA.

Impact -

• Major focus will be on ECB's take on Greece and inflation. Other aspects of monetary policy is expected to remain unchanged.

• Euro would be bearish if Draghi once again shrugs off all recent bond rout and inflation and assures ECB's commitment to the program and talks of more tools.

• However, Euro might turn bullish, if ECB suggests current level of Euro remains satisfactory.

Overall Euro is likely to maintain bearish bias and focus beyond ECB, on rate hike from FED this year.

Euro is currently trading at 1.093, key support stands at 1.085 area and resistance around 1.12-1.123.