Markets Waiting on Draghi’s Bazooka

With the European Central Bank’s policy announcement looming very shortly, the Euro continued to slide broadly as FX traders expect more policy adjustments. Mario Draghi will likely keep the ECB’s lending rate unchanged, but the consensus is calling for a further cut to the deposit rate which would, theoretically, encourage more lending among E.U. area banks. Moreover, many believe that Draghi will announce additional asset purchases, known as Quantitative Easing, in yet another attempt to jumpstart a flailing economy.

As reported at 10:37 am (GMT) in London, the EUR/USD was trading at $1.0981, down 0.19%; the pair’s range for today’s session went from a low of $1.0960 to a peak of $1.1001. The EUR/JPY was also lower at 124.5575 Yen, a decline of 0.04%. Meanwhile, the GBP/EUR was trading at 0.7724 Pence, down 0.19%.

ECB Must Not Underwhelm say Analysts

Eurozone inflation has remained stagnant with continued weak growth over the past several years. Mario Draghi had surprised and disappointed many times before, so there remains some uncertainty as to what he and the policy committee actually might do. Some analysts believe that this might be Draghi’s defining moment and that he will, indeed, pull out the bazooka that has been long awaited. They point out that given that markets have essentially already priced in more cuts to the deposit rate that leaves only QE to overwhelm.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.