Today- ECB Expected to slash interest rates.

The European Central Bank meeting is scheduled at 12:45 GMT. The consensus in the market is a 0.5% cut (from 2.5% to 2%). However, there are some traders who believe the ECB will go as far as a 0.75% interest rate cut on the Euro today.

It is obvious that a half percent cut is already priced in the market – EURUSD has been moving down on this account for some time now.
Traders will be looking for clues regarding the ECB’s next move, the faster they plan to slash interest rates in the future, the more weakness is expected from Euro based pairs.

More on the market- the Yen is continuing to gain against major currencies as stock markets decline.

USDJPY is getting closer and closer to its 13 year low of 87.11. With every 100 pips drop inflicting billions of dollars in loss to the Japanese economy – However, we  still did not hear Japanese officials firmly declaring they intend to tackle the Yen’s strengthening – maybe they hope for a natural market correction, maybe they wait for the Yen to drop further than 85 against the dollar before they wake up. Who knows?

In the meanwhile, the Yen is going to get stronger for as long as stock markets are falling, providing a safe heaven for investors on the back of the Japanese economy.

Z.Georgi

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