Mar 10


  • BY: Donal Kelly
  • March, 10th, 2016 19:22 +00:00

Good evening,

The ECB today  cut interest rates 5bp to a record low, with the benchmark rate now at 0.  Deposit rate also cut 10bp to -0.4% and the size of quantitative easing will increase by  E 20 bilion monthly to E 80 bilion.  Many fixed income traders expected an expansion of eligible assets due to the shortage of assets to be bought under the QE and they were right as the ECB widened QE also to corporate debt.  Mario Draghi is fully engaged in flighting deflation but quantitative easing makes Gold  probably the most interesting asset in the long term as Central Banks today wrote another chapter of the so called currency war. EurUsd  trading session was the most volatile since last December and the rate today dropped sharply with an intraday low at 1.0821 and then made a sharp rebound during the press conference. The rate is trading now at 1.1210 (+2%), up 219 pips. Global macro traders were disappointed as all those bearish news on the shared currency should have dragged down EurUsd, but in the medium term the trend on the rate was bullish and today EurUsd tested the dynamic support generated last December and rebounded from the trendline. It can be said that today technical trading won against fundamental trading.

In the commodity market  Gold is up 14.9$ to 1,272.3 $/oz (+1.18%) and Crude Oil is losing 24 cents at 38.05 $/barrel (-0.63%).  US indices are near their intraday  with losses near 1% for the Nasdaq Composite.