Good morning! Big news today is the European Central Bank policy meeting in Europe.
News just came out that it cut its benchmark rate to 0.05 percent from 0.15 percent. Reuters also reporting that a 500 billion euro asset-backed security (ABS) purchase program is on tap.
The way the Europeans do it is they make an announcement at 7:45 a.m. Eastern time. Then Chairman Mario Draghi gives a press conference at 8:30, where he would typically address any QE program.
The immediate reaction is for the euro to get crushed yet again. It is now down 106 pips (more than a full cent) to 1.3044. We will have to see if this initial move sticks through the trading day, and especially Draghi’s press conference, but at least initially, this is validating the “short euro” thesis I have had in place for several months.
Intraday chart of euro below. Stock futures are also modestly higher, while long bond prices are down a few ticks in the wake of this.
I’ll have more on the latest developments in my afternoon Money and Markets column later today.