FxWirePro: What to expect from ECB ahead?

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 11:45 GMT, followed by a press conference at 12:30 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
• This month onwards, the ECB is buying €60 billion assets per month.
• ECB has launched four new TLTROs.
• 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.
• Some are speculating that the central bank might further wind up its asset purchase program later this year.            

What to watch out for –

• ECB’s take on the geo political tensions and its contingency plans.

• ECB’s take on US protectionism and policy uncertainties.

• ECB’s take on Greece debt restructuring, which is still lingering.
   
• Does ECB leave the door open for further interest rate cut or the next move to be a hike?

• Concerns with regard to European banks’ balance sheet and call for the creation of a pan European bad bank.

• Contingency plans for the bond markets for the upcoming French election?

• What are the major risks for Eurozone in 2017?

Impact –

The euro has found a boost in last Sunday’s French Election outcome, where the pro-EU candidate Emmanuel Macron became the top candidate beating the Euro-skeptic candidate Marine Le Pen. The euro has also found support amid doubts on US stimulus in 2017. The euro is currently trading at 1.09 against the dollar. The euro is likely to maintain its upward trajectory if ECB doesn’t take any further actions.