Last night we had the European Central Bank rate Decision. Mario Draghi announced new Quantitative Easing measures and ten basis point decrease in official cash rate.
The European Central Bank lowered its main lending rate by 0.10 percentage point to 0.05 per cent. It cut a separate rate on bank deposits deeper into negative region, to -0.2% from -0.1%. In June, the ECB became the biggest central bank to trial with a negative rate on bank deposits, a measure aimed at encouraging banks to lend surplus funds to other financial institutions rather than paying to park them at the ECB
The ECB also said it ‘will acquire covered bank bonds and asset-backed securities’ and added that additional details will be released in October. Draghi did not indicate a size for the program, but said the ECB’s aim was to get its balance sheet, currently around €2 trillion, back to its size at the beginning of 2012, when it was €2.7 trillion.
The aforementioned items are all to combat the deflationary issues in the Euro-zone and also assist the recovery from 2010 sovereign debt crisis. Going forth in to the weekend we should see the positive trend to the AUD to EUR exchange rate continue to trade at levels that are well above 12 month highs.
Investors will be looking towards the US tonight as the non-farm Payrolls data is set to be released; prelim results last night came below expectations. Therefore, the results tonight should follow suit. The AUD/USD experienced gains last night and this should follow on tonight.