EUR
The Euro fell broadly on Wednesday after the European Central Bank kept
borrowing rates unchanged as expected and kept a dovish policy bias despite a
recent pick-up in economic activity. At Wednesday’s meeting, the ECB left its
main refinancing rate, which determines the cost of credit in the economy, at
0.05 percent. It also kept the rate on bank overnight deposits at -0.20
percent, which means banks pay to park funds with it. ECB President Mario

EUR
The Euro fell broadly on Wednesday after the European Central Bank kept
borrowing rates unchanged as expected and kept a dovish policy bias despite a
recent pick-up in economic activity. At Wednesday’s meeting, the ECB left its
main refinancing rate, which determines the cost of credit in the economy, at
0.05 percent. It also kept the rate on bank overnight deposits at -0.20
percent, which means banks pay to park funds with it. ECB President Mario
Draghi said the bank intends to fully deliver the previously announced stimulus
measures as risks to growth remain and inflation is subdued. This comes on the
back of reports that quantitative easing has begun to create a bubble pushing
up bond prices. Draghi said that despite interest on many government bonds
turning negative, there has not been signs of increased borrowing which is a
sign of a bubble.

Also some information released on Greece yesterday showed the true extent of
the poor performance of the economy in the last 4 years. The figures confirm
that Greece’s GDP shrank from €207bn in 2011 to €170bn in 2014. That means its
national debt swelled from 171% of GDP to 177% GDP last year, despite the
billions of Greek debt being written down in 2012 and heavy spending cuts.
 
Ratings agency Standard and Poor’s yesterday downgraded debt further into junk
territory giving it a CCC+/C rating. They state without deep economic reform
and further relief, Greece’s debt and other financial commitments will be
unsustainable. German finance minister Wolfgang Schauble vented his anger
yesterday at the slow progress being made on Greece. There is a Eurogroup
meeting at the end of this week but he doesn’t expect there to be any
resolution.
 
Key Announcements
13:30 – USD – Continuing Jobless
Claims expected to rise to 2.312M from 2.304M
13:30 – USD – Initial Jobless Claims expected to fall to 280k from
281k

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