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Euro suffered three of its biggest swings since the financial crisis, in last 12 months, while FED was responsible indirectly for one of them, ECB is twice guilty. One of them was yesterday, when Euro suffered heavy swings intraday despite European Central Bank (ECB) delivered a big package of stimulus.
Considering the package, which includes -
Main refinance rates were cut by 0.05% to zero.
Marginal lending rate reduced by 5 basis points to 0.25%.
Deposit rates reduced by 10 basis points to -0.4%.
Purchase program size increased by €20 billion/month to €80 billion per month.
Investment grade nonbank corporate bonds added to purchase program.
Launched four new LTROs, where banks can avail money at a rate as low as -0.4%. The program will end only in 2021.
Euro's move was surprising, which after initial drop closed in deep green against Dollar. Yesterday, Euro's move against Dollar was about 396 pips yesterday, biggest since ECB disappointed last December and 3rd biggest since 2008/09 crisis.
Even Euro Zone debt crisis didn't see this kind of price move, which shows the influence central banks have over market these days.
However, directional move wasn't that big. Euro's downside move was much smaller than seen during debt crisis, even upside was much smaller compared to December move.
Euro is currently trading at 1.114 against Dollar.
