This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The European Central Bank (ECB) extended the timeline of its quantitative easing (QE) scheme, but it wasn’t enough to satisfy the markets. Traders were hoping for a longer extension to the stimulus package and for the size of the monthly purchases to be beefed up.
Mario Draghi revealed that the bond buying scheme will now include regional debt and the programme will last at least until March 2017. Mr Draghi likes to talk the euro lower, and some traders were anticipating a much longer time frame for the QE scheme and others were anticipating a large increase in the size of the bond buying scheme.
As Draghi’s rhetoric in advance of the announcement was greater than his actions today, we have seen a surge in the euro and a severe sell-off in European equities. Gold pushed higher as the dollar was weakened by the strength of the single currency. The ECB chief hinted that more tools are available if needed – which lets the market know more easing could be on the cards.