Euro Falls Ahead of ECB Policy Meeting

The euro has begun today depreciating against major currencies, as currency investors await the decisions by the European Central Bank (ECB), at their policy meeting in Frankfurt today.

So far GMT, the euro has fallen against the US dollar, to buying $1.09, after starting the day purchasing $1.099.

The consensus of market expectations, are that there will be an expansion or an increase, to the ECB’s  60 billion euros per month quantitative easing (QE) asset buying programme.

Moneycorps believe that the market is set for disappointment, based on the decisions made in early December last year.

As opposed to the strong and decisive action that the markets were expecting, the ECB’s judgement to cut the bank deposit rate from -0.2% to -0.3%, was not viewed by many analysts to be enough action taken.

This resulted in a 2% hike for the euro, Moneycorps said that another anticlimax would be likely to send the euro higher once again.

And warned that aggressive stimulus policy moves, is almost certain to knock a significant amount of value off the euro.

FC Exchange analyst Daniel Wray, opined that the options that are open to the ECB, include using tiered interest rates, loosening the QE restrictions originally put in place.

And buying other bond types, or reintroducing three- and -year bank loans, as was seen at the beginning of the euro area financial crisis. 

German Trade Balance Reveals EUR 13.6 billion Surplus 

In January 2016, official figures have shown that the foreign trade balance reached EUR 13.6 billion, EUR 2.3 billion lower that what was found for the same month in 2015.

German exports declined by 1.4%, while imports increased by 1.5%, the latest data revealed.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments, showed a surplus of 13.2 billion euros, in January 2016.

These figures included the balances of trade in goods, including supplementary trade items which rose by 13.3 billion euros, and primary income which increased by 5  billion euros,

While services fell by 2.8 billion euros, and secondary income that also declined by 2.3 billion euros.

Germany dispatched EUR 34.3 billion of goods to euro area, a fall of 0.1%  in January 2016, and the value of the goods received from those countries was 33.3 billion euros , an increase of 2.7%.

Fitch Say Europe Credit Investors More Nervous Over Risks

Fitch have found that European credit investors have become more bearish, on a range of perceived market risks for this year.

Prolonged economic weakness was flagged as more dangerous concern to respondents, in comparison to the same survey conducted last October, as 77% compared to 36% said this was the highest risk.

The same proportion of those who were questioned, saw the threat from geopolitical risk is as high, up from 55%. While 65%  cited adverse emerging market developments as a high risk, up from 59%.

High sovereign debt was less of a worry, with 31% rating them as a major risk, nearly double the 16%  that saw them as a high risk in the fourth quarter of last year.