Mario Draghi caused spike on 3rd Dec 2015 | Forex Factory

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Mario Draghi caused spike on 3rd Dec 2015

  • #1
  • First Post: Edited 2:52am Jan 14, 2016 1:07am | Edited 2:52am
I'm failing to understand why the prices jumped on the 3rd of December 2015 when Mario Draghi announced ECB will continue buying 60BN per month and also downgraded the interest rate to -0.3. The monthly buying understandably causes prices to go up, however, doesn't this amount pale in comparison to the daily FX turnover let alone monthly? Also, doesn't this mean, the situation in europe is not improving thereby causing downward pressure on the currency pair? I'm failing to see where the price jump came from.
  • #2
  • Jan 15, 2016 3:58am Jan 15, 2016 3:58am
It was expected that Mario Draghi was going to unveil a major package certainly more than he did. This expectation had already been priced into the Euro. When the expectation was not fulfilled prices rose to reflect the new reality.
Too tired to argue. Too old to care.
  • #3
  • Jan 15, 2016 7:15am Jan 15, 2016 7:15am
Oh so the expectation was that he was going to increase the amount of buying of the euro?
  • #4
  • Edited 4:28pm Jan 15, 2016 1:06pm | Edited 4:28pm
Quoting Atomic_Sheep
I'm failing to understand why the prices jumped on the 3rd of December 2015 when Mario Draghi announced ECB will continue buying 60BN per month and also downgraded the interest rate to -0.3.
"Although the deposit rate was cut, the market had been factoring in a drop of more than the delivered 10 basis points here, whilst the extension of the bond-buying programme had been fully priced in, too."

"The ECB cut the deposit rate by the minimum amount expected, extended the length of QE program by six months when the market was looking for 12 months and expanded the pool of assets available for purchase without increasing the size of monthly purchases."

"The euro had been pushed lower and stock markets had been driven higher in expectation that the ECB would do something meaningful. When it didn’t, the markets unwound the positions built in advance of Draghi’s announcement.
The smart money will be on the euro’s rise being temporary. After all, it is widely expected that the Federal Reserve will raise US interest rates for the first time since 2006 when it meets this month. But talk of a further big plunge in the euro look overdone. An increase in US borrowing costs is already in the price. And Draghi has shown all too vividly that the hints of central bankers – even the biggest hints – should be treated with some caution."

(source for all the above quotes)
  • #5
  • Jan 15, 2016 1:12pm Jan 15, 2016 1:12pm
Quoting hanover
{quote} "Although the deposit rate was cut, the market had been factoring in a drop of more than the delivered 10 basis points here, whilst the extension of the bond-buying programme had been fully priced in, too." "The ECB cut the deposit rate by the minimum amount expected, extended the length of QE program by six months when the market was looking for 12 months and expanded the pool of assets available for purchase without increasing the size of monthly purchases." (source)...
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  • #6
  • Jan 15, 2016 4:27pm Jan 15, 2016 4:27pm
Quoting orabi
great you are so super b thank you so much have a nice day please
Thanks, but all I did was use Google.
  • #7
  • Last Post: Jan 15, 2016 5:35pm Jan 15, 2016 5:35pm
Quoting hanover
{quote} Thanks, but all I did was use Google.
thank you sir
have a nice day please
focus while relaxed to see better
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