Overnight, the euro drifted on light volumes as traders readied themselves for today’s ECB decision.
While consensus is for a 25 basis-point cut, there is a divergence of views. Some are advocating a more aggressive 50 basis-point move, while others are suggesting any cuts to the cash rate are likely to have a marginal impact at best.
Those calling for no change at all are instead suggesting that additional instruments and changes in open-market operations guidance and further adjustments to collateral standards may be on the agenda. Given proposed initiatives announced at last week’s EU summit that included the ECB acting in a supervisory capacity over the ESM, Draghi’s comments around such measures will be extremely interesting.
Having ended yesterday’s Australian session around the 1.2595 level, the euro drifted to close at 1.2527. Upon resuming for Asian trade the euro is essentially unchanged.