ECB decision was announced along with publication of new portion of EU statistics.
Draghi has decreased an interest rate twice from 0.5% to 0.25%. Almost no one really believed in such resolve of the ECB. So there is no surprise that the market reacted in such an abrupt manner. It is quite interesting that Bundestag president turned out to be in minority, calling for leaving the rate intact and waiting for release of economic forecast.
The other factor of Euro decline was a promise of Draghi, that if inflation continued to go down, the regulator was going to use incremental instruments, including emission in the economy of the Euro zone for additional liquidity through long term operation of refinancing. More over the ECB is ready to undertake another dwongrade of the rate, making it almost zero, if situation is going to become worse.
The ECB decision was announced along with publication of new portion of EU statistics. In Ireland the downgrading of consumer prices was seen at 0.1%. In Greece they also report about downgrading of prices. Against such background the ECB had to undertake at least some measures, because otherwise Draghi would be blamed for all woes.
By the way another important moment. The decision about downgrading of the rate was made against position of Berlin on that issue. In Rome and Paris the news about downgrading was accepted with joy. So now it’s not likely that the Euro is going to show any more or less significant growth.
As for American economy it showed growth by 2.8% on GDP for the third quater, while the expected figure was supposed to constitute 2% only. Besides, data on the second quarter was revised to increase from 1.7% to 2.5%. It is not surprising that it has supported the US Dollar and only accelerated the fall of the pair.
The Euro dropped to 1.3300 after the ECB announcement about the interest rate. Previous support of 1.3450 has turned into a resistance. The downward pressure as an aftermath of the ECB decision can push the Euro to 1.3300 and lower.
The pair fell from the resistance area at 99.00. It is ranged at the moment between the boundaries 97-100. Current consolidation is expected to last for a couple of days or so.
The Pound fell to 1.6008 and afterwards rebounded back up. It must surpass resistance 1.6120 in order to appreciate further up. Support is seen at 1.6065-70.
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09:30 GBP Trade Balance
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