ECB set to announce a possible €600bn – €1.2trn QE plan

<p>Yesterday we saw some shocks from the data releases, notably causing moves in cable. The minutes were released with a surprise 9-0 vote to hold rates, with the two […]</p>

Yesterday we saw some shocks from the data releases, notably causing moves in cable. The minutes were released with a surprise 9-0 vote to hold rates, with the two hawk members withdrawing their push for raising rates on the back of last week’s weak inflation data.

GBP/USD is currently trading below 1.5150, near to levels it fell from after the release and with the Public Net Sector Borrowing, the only data to be released today for the UK is expected to be 9.2bn compared to the last release of 13.4bn. One to watch for the GBP traders is the EUR/GBP upon its reaction to ECB meeting.

Today’s ECB meeting is perhaps one of the most anticipated to date, as we look for the announcement of quantitative easing (QE).  Yesterday rumours hit the wires about a possible €50 billion to be used per month to buy government bonds for a period of 1-2 years, which quickly sent the Euro falling. The expectation for the QE is now between €600 billion and €1.2 trillion, and it seems that the risk is likely to fall going by yesterday’s reaction. The shocks to happen that could counter this would be a figure larger than €1.2 trillion or no QE at all – but you can be sure the market will be extremely volatile.

If QE is announced, the importance will be the detail of how it will be put into place and who will be buying the bonds – whether it’s the ECB, or whether it will be tasked to the national centre banks.

Currently EUR/USD is trading below 1.1600 with the main event this afternoon, before this the minimum bid rate will be announced for the Eurozone – expected to be unchanged at 0.05%.

Another shock announcement from yesterday was the Bank of Canada announcing a rate cut of 0.25%, making the rate 0.75%. The surprise action took USD/CAD to 5-and-a-half year high, now above 1.2350.

Data from the US will be thrown in with the volatility of the ECB, as the unemployment claims are expected to fall to 301,000 from 316,000.


Supports  1.1550 1.1480 1.1415   | Resistance  1.1810 1.1750 1.1680




Supports  1.1720 1.1650 1.1590 Resistance  1.1850 1.1910 1.1980




Supports  1.5085 1.5030 1.4980 Resistance  1.5190 1.5235 1.5290


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.