FxWirePro: What to expect from ECB ahead?

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 11:45 GMT, followed by the press conference at 12:30 GMT. Meeting is to be held at the central bank of Latvia.

Current policy measures–

• Deposit facility rate at -0.40 percent
• Refinancing rate 0.00 percent
• Marginal lending facility rate at 0.25 percent
• ECB has several TLTROs in its portfolio.
• Assets can be bought at yields below the deposit rate.
• In the latest action, ECB tapered asset purchases to €30 billion and extended the program until September 2018.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy.
• With ECB announcing clear path until September, no action is likely.
• However, the market is looking for a guidance on future actions and a bit desperately.

What to watch out for –

• Change in inflation forecast.
   
• Take on tapering or on the future path of monetary policies.

• The high level of NPLs in European banks, especially in Italy.
   
• Political trouble in Italy, where populists have won the majority of the votes.

• Contingency plans for a looming trade war with the United States.

• Contingency plans from the Brexit fallouts.

• Whether ECB seems comfortable with the level of the Euro or does Draghi talk the currency down.

Impact –

The euro has remained upbeat despite the European Central Bank (ECB) extending the asset purchase program beyond expectation. Though it has suffered decline since March/April due to rising rates in the U.S. and Italy’s political trouble.

The euro is currently trading at 1.18 against the USD.