Key events of overnight mayhem – Westpac

By FXStreet FXStreet (Guatemala) – Sean Callow, analyst at Westpac noted the day’s events over night and unraveled the volatility of what came of the ECB decision.

Key Quotes:

“The ECB cut the deposit rate by 10bp from -0.2% to -0.3%. This was at the lower end of the market expectation range of 10bp-30bp. It extended the asset purchase program’s end date from Sep 2016 to Mar 2017, but left the monthly amount at EUR60bn, whereas a number of forecasters looked for an increase in the pace of money printing. Other steps included a plan to reinvest purchased bonds as they mature, which has no short term impact and is only what the Fed and BoE are still doing. The ECB will also expand the range of assets purchased to included debt of regional and local governments, though clearly this will come at the expense of sovereign bonds.

The outcome was not far from Westpac’s base case, for -0.3%, extension of the program into 2017 but no change in the EUR60bn monthly total. But market positioning was obviously very lopsided, given that being short into an ECB meeting has often been very profitable. EUR/USD was around 1.0550 ahead of the ECB decision, rising in waves …read more

Source:: FX Street