ECB: Expect no more measures at the current juncture – Danske Bank

Matías Salord FXStreet

The European Central Bank decided to keep interest rates unchanged and to increase the pandemic emergency purchase programme (PEPP) by 600 billion euros. With the larger PEPP envelope, analysts at Danske Bank do not expect the ECB to announce
further measures at the current juncture.

Key Quotes:

“The ECB decided to increase the PEPP envelope by EUR600bn to EUR1,350bn, which was slightly more than our estimate and consensus of EUR500bn.”

“With the new increased envelope, the PEPP would be exhausted in late February 2021, if the ECB does not lift the envelope again, or the purchase rate will have to slow down.

“Looking ahead, with the larger PEPP envelope, we do not expect the ECB to announce further measures at the current juncture. During the press conference, Christine Lagarde was relatively balanced in her assessment, albeit acknowledging the downside risks to the -8.7% growth forecast for 2020. Today’s decision was on a broad consensus, while there was unanimity to do something.”

“Fixed income markets reacted positively on the slightly higher than expected package, most notably led by Italy, where we saw the BTP-Bund spread tightening by 20bp. We now have more ECB easing but a stronger EUR.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.