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 programme of € 60 billion from this month.
Expectation today –
- No change in monetary policy is expected today, that makes ECB press conference ever more pivotal.
What to watch out for –
- Changes in growth and inflation forecast as hard data are improving across board. Most pivotal would be changes in inflation forecast.
- How concerned ECB is over rapid fall in interest rates to negative zone and is it to affect the purchase program.
- Mario Draghi has so far remained insistent of full implementation of the program, his views over early wind up of the program.
- ECB’s view on liquidity in the market.
- Negative rates are pushing average duration of the portfolio, ECB’s view on that.
- ECB’s stance on Greece like as of now, how possible might Grexit be?
- ECB’s view on current list of reforms sent by Greek government.
Impact –
- Major focus will be on Euro and the Euro zone bonds. Euro is trading at 1.059, flat for the day.
- Euro would be bearish if Draghi once again shrugs off all possible downside and cost related to purchase.
- However, Euro might turn bullish, should Draghi provides any hint of earlier wind up of purchase. That is a possibility though very unlikely.
- Any positive hint by ECB, towards Greek debt restructuring could be Euro positive.
Key support stands at 1.048 -1.045 area and resistance around 1.072-1.075.
The material has been provided by InstaForex Company – www.instaforex.com