Market Snapshot – ECB Extends QE, Disappoints Euro Bulls

Euro Corrects Under Pressure

The star of the day was expected to be the euro and it was proved right as the ECB did the star turn which shot down the euro by belying the market expectations. The ECB extended the QE much longer than what was expected by the market and though it did cut down the QE, the timeline proposed by the ECB was much longer and this disappointed the euro bulls big time. They showed their displeasure by selling off the euro which which climbed beyond 1.18 during the first half of the day but this news has since carried the euro to below 1.17 during the US session and the currency is expected to be weak across the board in the short term as the market digests the weakness and the unexpected extension of the QE by the ECB.

DAX Breaks Free

On the flip side, this has given a large boost to the European stock markets which had shot higher with the DAX moving higher by more than 100 points and finally managing to break free of the 13000 region for good. They had been under pressure over the last few weeks as the tapering would have led to withdrawal of funds from the markets and this would have reduced the liquidity but with this extension, the stock markets have got a new lease of life and the bulls have now started buying into the markets big time. This is also likely to last for the short term atleast and would help the European stock markets to join the global rally in the stock markets.