By: DailyForex.com
Given the equity market’s recent and sometimes extreme turbulence, many traders are betting that the European Central Bank will make the decision today not to rock the proverbial boat. Investors believe that the ECB will leave borrowing and deposit rates at their current historically low levels. That has helped the Euro to stabilize, and even occasionally to push higher, against the US Dollar. Recent “surprises” by the Canadian and Brazilian central banks, i.e. to maintain the status quo when expectations were for more easing, are supporting the ECB outlook.
As reported at 10:42 am (GMT) in London, the EUR/USD was trading at $1.0891, essentially flat on the day; the pair has ranged from $1.0868 for the session’s low to $1.0925 for the session’s peak. The EUR/GBP was higher at 0.7702 Pence, a gain of 0.34% and closer to the upper end of the day’s trading range at 0.7716 Pence.
ECB Outlook Still Uncertain
Though the market’s expectations call for no ECB easing today, that likely won’t stop Mario Draghi from touting up possible future efforts. The head of the ECB is likely to remind markets that the inflation target of 2% is still well out of reach and that both monetary and fiscal policies will be needed to attain that goal. However, markets are divided as to how far the ECB is willing to go to depreciate the Euro. While almost all analysts once had expectations of EUR/USD parity, that majority seems to be diminished.