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Market Recap – Draghi’s moment

Thursday, September 12, 2019 10:48 AM GMT

The long awaited September’s ECB monetary meeting is happening today. At his next-to-last monetary meeting, Mario Draghi, the “whatever it takes” Governor that made no rate hike during his term, is expected to announce a new stimulus package. This comes a day after Trump’s good will gesture to delay an increase of tariffs for 2 weeks.

The previous QE program lasted for 3 years and 9 months. It started on March 2015 with €60bn per month net asset purchases, increased to €80bn per month on April 2016, decreased to €60bn per month on April 2017, decreased to €30bn per month on January 2018 and decreased to €15bn per month on September 2018 before ending on December 2018.

A highly speculative thinking would be to compare the size of today’s announcement with the size of the previous, initially announced QE program that meant to last 18 months (i.e. 60bn x 18 months = 1,08tn EUR). A number above this threshold potentially favors shorting the EUR. On the other hand, any number below €860bn, potentially favors buying the EUR.

There is a wide range of expected measures that Draghi could announce, and an even wider range of interpretations of these measures. The certain thing is that contradicting interpretations is the fuel of high volatility in the financial markets. 

Macro releases: Other than the ECB’s monetary meeting, OPEC+ meets in Abu Dhabi to support oil prices and the US inflation release is coming out today. Full economic calendar is here.

Disclaimer

The views expressed do not constitute investment or any other advice /recommendation /suggestion and are subject to change. Reliance upon information in this material is at the sole discretion of the reader. Opinions expressed in the report do not represent the opinion of ZuluTrade Social Trading Platform and do not constitute an offer or invitation to anyone to invest or trade.

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