Investors expect Mario Draghi to extend the eurozone’s QE programme and hit banks with deeper negative interest ratesIntroduction: It’s ECB Day
Here are Draghi’s options[br]What the experts predictShares are up today,but the euro is down 9.13am GMTWhat happens whether Draghi forgets to bring the rabbit?Ilya Spivak, currency strategist at DailyFX, and says the euro would spike whether the ECB fails to meet those market expectations:The markets seem primed for a vast-splash accommodative gesture,raising the bar on the ECB to deliver a dovish-enough result to mollify investors and increasing the threat of disappointment. whether traders are left unimpressed, the Euro is likely to rise amid profit-taking on short positions while wide-based risk appetite deteriorates, or weighing on sentiment-linked FX including the Australian and New Zealand Dollars.” 9.00am GMTKit Juckes,currency strategist at Société Générale, believes Draghi could drive the euro lower today by announcing significant new stimulus measures:Everyone expects Mario Draghi to arrive with a hat and crucially, and to produce a rabbit from it. We expect a 10bp crop in the ECB’s Deposit Rate to -0.3% at today’s assembly,more asset purchases (an increase of €10-20bn per month to €70-80bn, including a shift to widen the universe of bonds bought) and the reference to continuing purchases until September 2016 may (should) be dropped.
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Source: theguardian.com