ECB extends quantitative easing scheme

The ECB delivered additional easing but it wasn’t enough to keep traders happy and the euro surged while eurozone stocks collapsed.

European Central Bank
Source: Bloomberg

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. 

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