IIFT Daily Note with Peter Brown

ECB. Will they won’t they?

Posted by:  |  Time: 7:55 am  |  Topic:
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All eyes on the ECB today. First up the rate decision at 12.45. Market is expecting a .25% cut. No cut or .5% cut will be the surprise. Later Mr Draghi holds his press conference at 1.30pm. This will be the main event. What he says and his tone will make clear whether the ECB is moving towards a more pro-active stimulus model. This has the possibility to cause serious volatility in these already volatile markets.

Yesterday the S&P took a hammering on poor employment figures. Friday is NFP so after today’s excitment we will do it all again tomorrow.

Trading today: .25% will be a damp squid. The action is on no cut or .5% . Euro will rise on no cut and fall on .5% A straddle play is ideal here but the chances are that little will happen.

More important is the speech. Expect serious volatility and a jobbing opportunity as he speaks. The market sentiment is what to trade after, as the move could be 150 points +

It is likely the Euro will move in the opposite direction to DAX and IBEX. Rate cuts are good for stocks.

The big move will come from an entrenched ECB. DAX and IBEX are up 500+ points on the basis the ECB will act. These are the markets vunerable to no change.

Elsewhere on the S&P, we had a serious sell off yesterday on the back of bad employment figures. Today is Europe’s day tomorrow the focus will return to the US.

Levels today are  S&P 1588  1585  1576  Euro 1.3240  1.3100 but don’t expect those levels to hold it we get a surprise decision.

 

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