Waiting for ECB decision
Quote of the day: “Courage is grace under pressure!”
March 10th: Highlights
- ECB rate decision and press conference
- Bank of Canada keep rates on hold
- RBNZ surprises with rate cut
Back in December, the market was expecting a significant policy adjustment. When the cuts were less severe than expected, the Euro rallied 3% on a very volatile trading day. The ECB has warned of more stimulus and more dramatic action this time around. Suggestion is that we’ll see a rate cut of 10 bps and an increase to the QE bond purchase program of up to Euro 20 billion per month. There is a degree of skepticism, and commentary suggest the market doesn’t have such a large position in play, so current calls are for any reaction to be less savage this time around. Nevertheless, the reaction is eagerly anticipated – the JPY kicked on 10% after a cut into negative territory.
In Canada, forecasts correctly called the BoC keeping rates unchanged and it passed with little reaction.
The market didn’t expect the rate cut from New Zealand though. There were 17 economists polled by Bloomberg earlier in the week and 15 called ‘no change’. The 0.25% cut largely took the market by surprise and the NZD sold off.
A surprising update from the US election race as Hilary Clinton, expecting an easy victory in Michigan, lost to Bernie Sanders. She does still hold the overall lead, but it delivers some warning signs to the Clinton campaign.
Have a great day!
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