Markets Look Forward to the ECB

We enter into a day that is likely to be key to the direction of the Euro in the short term and also for the European stock markets as well. The ECB is scheduled to announce the rates and no change is expected in that. What will be the focus of attention is the press conference after that where the ECB President Draghi is expected to announce, by way of a statement, on what he plans to do with the QE program that is currently underway and that which is scheduled to end by March 2017. The QE is expected to be tapered off and ended by that time but the markets are hoping and looking forward to an extension of the program by the ECB. If this happens, then the Euro is likely to be hit hard but the European stock markets would love it and it is in anticipation of this, that the DAX skyrocketed yesterday.

The Euro continues to trade quietly with a bullish bias but we expect a lot of volatility in the euro around the ECB statement and the press conference and traders would be well advised to stay in the sidelines till the dust settles.

There has not been much happening in the markets around the world and they have been trading quietly this morning. The underlying theme has been dollar weakness to an extent as the US yields drop off their highs and this has helped to keep the dollar under pressure. The focus for the rest of the day will be firmly on the ECB and on our side, we do expect the ECB to extend the QE program and we expect the euro to weaken as a result of this announcement.
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