Home > Resource Hub > Daily Market News > Brace yourselves, € – Day is here

Brace yourselves, € – Day is here

Brace yourselves, € – Day is here

Mario Draghi will be cleaning the barrels of his artillery this morning as the market awaits his next move in his ongoing battle against the threat of deflation. So far the European Central Bank (ECB) has implemented varying stimulus measures in 10 of their 47 monetary policy meetings since Draghi took over. However, the measures seem to have had little effect as the Eurozone was hit with a negative inflation rate last week.

It is widely expected that the deposit rate will be cut further into negative territory. As a consequence, the markets will need to see Draghi do more than what has already been priced in, in order to weaken the Euro. An underwhelming outcome is likely to spark a sense of déjà vu; we saw the single currency strengthen against its peers following a limp alteration to QE in December. There is chatter that there could be an expansion of the programme, or a further extension to the end date. Either way, expect Euro volatility today.

We saw no major changes in GBPUSD yesterday as Cable continued to trade just below the 1.42 threshold. The only relevant data out from the States today will be the weekly jobless claims. However, these are released at the same time as the ECB announcements so the impact is likely to be muted. The influence of Draghi’s announcement on EURUSD will likely spill over into Cable, increasing the chances of instability today.

Yesterday’s UK industrial production data was weaker than expected as it was at 0.3%, which was 0.2% lower than the prediction of 0.5% (MoM). However, the UK economy bounced back as we saw manufacturing production data come in stronger than expected – it was at 0.7% (MoM). The Pound has traded mostly sideways this week as we are waiting for the ECB rate decision – Sterling has opened at 1.42 against the Dollar and at 1.29 against the Euro.

Data to watch: 12.45 ECB Rate Decision. 1.30pm ECB Monetary policy statement and press conference.

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.