Avoid Speculation Ahead Of ECB Announcement
The European Central Bank meets tomorrow to discuss monetary policy and the view from the majority of economists and traders is that extra monetary stimulus is all but a certainty. Today, the shared currency fell against thirteen out of sixteen of it's major peers, as swaps indicated that a 10 basis point cut to the ECB's -0.3% deposit rate is fully priced in.
Against the US Dollar, the Euro dropped 0.4 percent to 1.0965 today, after touching 1.1058 yesterday, which was the highest level since 26th February. Against JPY it fell for a third day, dropping 0.6 percent to 123.34 Yen.
As it seems the markets have priced in for extra stimulus to be introduced, tomorrow's decision now seems like a foregone conclusion. This being said though, we'd encourage people to go ahead and convert money, rather than speculate, if they have conversions and payments to make. As we've seen over the past few weeks, it only takes one politician or economist to make a mild suggestion or comment, for the currency markets to become highly volatile, so when it comes to exchange rates, at present, things are extremely unpredictable.
President of the European Central Bank, Mario Draghi, is facing a challenge to convince the market that further easing can tackle slow growth as well as low inflation. He has been criticised on a number of occasions about the strength of the ECB’s quantitative easing programme as well as the ECB's negative interest rates policy.