It's all about the ECB meeting today at 23:45 AEST, followed by Mario Draghi's press conference at 00:30. The fact EUR/USD didn't rally overnight despite poor US data suggests the market is positioning for dovish action. For me, the main issues to look for would be a cut to the refinancing rate from twenty-five basis points to say ten basis points. The idea here is to limit the upside in EONIA (interbank lending rates) rates. There is also a lot of talk about not sterilising the bonds it's purchased through its Securities Market Program (SMP) during 2012. This would cap gains in the EUR as it could see its balance sheet expand by around 6%. We also need to look out for revisions to its economic projections and any material downgrade to its inflation forecasts could be bearish. The risk/reward trade is certainly to be long


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Chris Weston

Cheers James.

James Marlay

Really enjoying these morning summaries Chris.