The ECB president confirmed that he expected the lending and bond buying program that would increase the central bank's balance by almost 1 trillion euro. According to the market participants, it corresponds nearly to the amount that Draghi had in mind in his speech during the last monetary policy press conference.
The regulator intends to scale back its balance to the level of 3 trillion euro where it was in March 2012 that means that ECB managers are unanimous about the need to expand the leniency programs. The ECB president statements did leave no doubt over the European Bank’s policy and put strong pressure on the euro.
We advise to consider short positions with the first target – 1.2280-1.2300. After fixing below the first target, the level 1.2110-1.2130 will become the next one.
The British pound was trading near the low level of 1.5780-1.5800 after the Bank of England signaled about the British economic slowdown and kept the interest rate unchanged at the level of 0.5% during its regular meeting. Then the pair slightly increased.
This year the UK economy showed the fastest growth rates among the developed countries, but the recent data suggest that these rates are slowing down. The gross domestic product growth (GDP) in the 3rd quarter slowed to 2.8% against 3.7% in the 2nd quarter. This is evidenced by the official data released last month.
We advise to consider short positions with the first target – 1.5780-1.5800. After fixing below the first target, the level 1.5630-1.5650 will become the next one.
The yen is near the seven-month low against the dollar after the Bank of Japan governor’s statements regarding the intentions to keep the central bank incentive policy as long as it is necessary.
The market sentiment provided with the ECB information and the expectations of the US good employment results returned the dollar demand back at the previous level. The yen remains under the external information influence and the most important factor is the US labor market message.
We advise to long with the first target – 115.25-115.45. After fixing above the first target, the level 118.60-118.80 will become the next one.