EUR/USD Fundamental Forecast – September 9, 2016

The EUR/USD soared 61 points after the ECB held rates and policy. The euro rallied hard as markets were expected Draghi to at least push monetary purchases out another 6 months. The euro climbed to 1.13. Euro hits two-week high of $1.1316 after ECB announcement, up 0.7 percent on day. Meanwhile, German government bond yields extend rise after ECB announcement, 10-year yield up 3.3 basis points on day. That’s according to Reuters.

We expect some clarity on the ECB stance on monetary policy outlook, new macro-economic forecasts and the crucial question will be if the ECB will announce an extension to its QE program.

Today’s statement from the Governing Council was short and concise.

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

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Upcoming Economic Events that you should be monitoring:

 September 9, 2016

Government Bond Auctions

Date Time Country Auction

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction