What to expect from ECB ahead?

Today European Central Bank (ECB) is to provide further guidance in policy meet. The result to be announced at 11:45 GMT, followed by a press conference at 12:30 GMT. 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.
• In March, ECB has launched four new TLTROs.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy.
• However, ECB might face questions over recent rumor of tapering.

What to watch out for –

• ECB’s take on the recent rumor on tapering.

• ECB’s take on Portugal. If DBRS downgrades Portugal, its bonds would become ineligible to purchase under QE.
   
• ECB has set up a committee to discuss further steps in monetary policies. Updates on that.

• Weather ECB keeps the door open for further asset purchases stimulus or not?

• Does ECB leave the door open for further interest rate cut?

• Issues with Deutsche Bank.

Impact –

• ECB president Draghi will try to talk down the Euro as the stimulus expectations are likely to weigh on the single currency.

The euro is currently trading at 1.097 against the dollar. We have forecasted the single currency to drop further towards parity. We suspect that the Euro might strengthen today, post-ECB conference.