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23 Jan 2015
Session Recap: And the day came when the risk to remain tight... First ever ECB QE
FXStreet (San Francisco) - 'And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.' Anaïs Nin saw it first, then Alicia Keys. Today, Mario Draghi said enough and launched the first ever QE in the ECB. And it came beyond expectations.
However, according to BNP Paribas analyst Clemente De Lucia, "while in terms of size and commitment, the ECB probably did more than markets had expected, the very limited risk pooling was rather disappointing. Evolution of inflation expectations, interest rates and exchange rates will be pivotal to assess whether the program is producing the desired effects."
The program will be open ended but intended to finish on September 2016. But as Wells Fargo's Global Economist Jay Bryson commented in a recent report, "the ECB may very well be purchasing bonds well beyond its intended time frame of September 2016."
In this framework, the EUR/USD was the bigest loser of the day as it collapsed more than 2.3% in the day against the US Dollar while 1.8% versus the CAD and 1.84% against the Japanese Yen.
Against the US Dollar, the euro lost nearly 340 pips following the ECB decision from 1.1650 to trade at its lowest since September 2003 at 1.1315. The EUR/USD is closing now at 1.1330. FXStreet chief analyst commented that the "ECB move has somehow reaffirmed the dominant bearish trend, and despite USD longs may be overcrowded, the pair is now set to reach the key psychological figure of 1.10 in the upcoming weeks."
Long story short, the GBP/USD collapsed to 1.4970, lowest since July 2013, before recovering some ground and closing at 1.5000. The USD/CAD traded as high as 1.2415 for the first time since April 2009. While the AUD/USD collapsed to price below 0.8000 for the first time since July 2009; and the fell to 0.7475, lowest since June 2012.
Key quotes:
ECB rates unchanged, but press conference is key
Draghi: EUR60bn-a-month programme beginning in March
Draghi: 20 percent additional asset purchases will be subject to a regime of risk sharing.
United States Housing Price Index (MoM) climbed from previous 0.4% to 0.8% in November
United States Initial Jobless Claims registered at 307K above expectations (300K) in January 16
US stocks close at session highs after ECB QE
Reports on ECB:
Let's do QE!!! by BNP Paribas
The ECB delivers a strong QE by BBVA
ECB Announcement Largely Exceeds Expectations BY Wells Fargo
However, according to BNP Paribas analyst Clemente De Lucia, "while in terms of size and commitment, the ECB probably did more than markets had expected, the very limited risk pooling was rather disappointing. Evolution of inflation expectations, interest rates and exchange rates will be pivotal to assess whether the program is producing the desired effects."
The program will be open ended but intended to finish on September 2016. But as Wells Fargo's Global Economist Jay Bryson commented in a recent report, "the ECB may very well be purchasing bonds well beyond its intended time frame of September 2016."
In this framework, the EUR/USD was the bigest loser of the day as it collapsed more than 2.3% in the day against the US Dollar while 1.8% versus the CAD and 1.84% against the Japanese Yen.
Against the US Dollar, the euro lost nearly 340 pips following the ECB decision from 1.1650 to trade at its lowest since September 2003 at 1.1315. The EUR/USD is closing now at 1.1330. FXStreet chief analyst commented that the "ECB move has somehow reaffirmed the dominant bearish trend, and despite USD longs may be overcrowded, the pair is now set to reach the key psychological figure of 1.10 in the upcoming weeks."
Long story short, the GBP/USD collapsed to 1.4970, lowest since July 2013, before recovering some ground and closing at 1.5000. The USD/CAD traded as high as 1.2415 for the first time since April 2009. While the AUD/USD collapsed to price below 0.8000 for the first time since July 2009; and the fell to 0.7475, lowest since June 2012.
Key quotes:
ECB rates unchanged, but press conference is key
Draghi: EUR60bn-a-month programme beginning in March
Draghi: 20 percent additional asset purchases will be subject to a regime of risk sharing.
United States Housing Price Index (MoM) climbed from previous 0.4% to 0.8% in November
United States Initial Jobless Claims registered at 307K above expectations (300K) in January 16
US stocks close at session highs after ECB QE
Reports on ECB:
Let's do QE!!! by BNP Paribas
The ECB delivers a strong QE by BBVA
ECB Announcement Largely Exceeds Expectations BY Wells Fargo