The Euro’s seen significant gains across the board after the ECB’s meeting and subsequent press conference. It was always a question of how much of the monetary easing was priced in as the Euro had been losing ground in the run up to the meeting. ECB President Mario Draghi had been sending out clear signals over the last few weeks that the ECB would taking a very close look at the current level of QE and some analysts and market participants had been expecting more from the central bank.
In the end, the ECB have elected to cut the deposit rate by a further 10 bps taking it down to -0.30% and have extended the asset purchase programme (QE) to at least March 2017, a 6 month extension from the previous Sept 2016 deadline. As the market was pricing in 20 bps cut and more expansion/extension to QE the Euro quickly rose, with GBPEUR falling 4 cents on the day and EURUSD rallying up towards 1.09 from 1.0550 before the announcement. The next key calendar release comes in the form of tomorrow’s US Non Farm Payrolls and unemployment data – if the numbers disappoint we’ll see more EUR strength as it will weigh on the chances of US interest rate hike at the FOMC monthly meeting on 16th so all eyes are on 1.30pm UK time tmrw.