ECB may boost PSPP with €120 billion: sounds better, doesn’t it?

We don't think if we ask the question, which sounds better coming from ECB - €10 billion or €120 billion, we would be having difference of opinion. And that is despite the fact that both are same.

If ECB boost current purchase program by €10 billion per month, starting this month and keep the purchase time line unchanged the amount will be equivalent to a boost of €120 billion. However, psychological analysis suggests, market loves bigger numbers, coming from central bank and the second is more likely to boost equities higher and Euro lower.

Even if the analysts and especially markets comes to term with the trick, study has shown first impression continues to linger.

If ECB do surprise market and proving analysts like us wrong, no doubts cheering will be there, however if it doesn't deliver key bazooka, market reaction will equally depend on how ECB places the platter. It's not just about numbers, but future guidance too.

Price actions surrounding Euro suggests, traders have refrained from taking any directional view, especially after December shock and awaiting ECB announcement.

Euro is currently trading at 1.097 against Dollar.