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ECB On Focus

To understand the trading methodologies during ECB, we must first understand the call for meeting and its contents. Given below are few key points to watch during the meeting:

• When will the QE purchase end?

If ECB decides to taper the program by end of 2017 or start of 2018, then this will send the euro to new highs which is very unlikely to happen during today’s meeting. On the other hand, if ECB decides to move the announcement by itself to next year, then euro will sink to new lows.

• Will there be a cut in its purchases?

If the Central Bank decides to cut its purchase from 60 billion euros to 40 billion euros then it suggests that the program will continue through H2 2018, but if they decide to cut the purchase by 30 billion euros then the policy makers have an upper hand to end the program by mid next year. Volume matters.

• Problem with strong euros

Both Draghi and the Central Bank is not happy about the strong euro and has tried to downplay with no impact. If Draghi tries to downplay the euros along with the banks, then the euro will be pressured but if he ignores the banks and decides not to touch this point, then we may see some fuel for the euros.

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