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. The meeting is to be held in Tallinn, Estonia.

Current policy measures–

• Deposit facility rate at -0.40 percent
• Refinancing rate 0.00 percent
• Marginal lending facility rate at 0.25 percent
• This month onwards, the ECB is buying €60 billion assets per month.
• ECB had launched four new TLTROs.
• Under the new rule, assets can be bought at yields below the deposit rate.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy.
• Some are speculating that the central bank might reduce its inflation forecast.

What to watch out for –

• Change in inflation forecast.
   
• ECB’s take on US protectionism and policy uncertainties.

• ECB’s take on Greece debt restructuring, which is still lingering.
   
• Does ECB leave the door open for further interest rate cut or the next move to be a hike?

• Concerns with regard to European banks’ balance sheet and call for the creation of a pan-European bad bank.

• Contingency plans from the Brexit fallouts.

• What are the major risks for Eurozone in 2017?

Impact –

The euro has remained upbeat since the French election outcome in April. From that point, it is up more than 600 pips against the dollar and is currently trading at 1.123 against the dollar. Despite the outcome of today’s meeting, the euro is likely to continue its upward march against the dollar.