ECB All Hands On Deck

Draghi and his fellow cohorts at the ECB have finally decided to throw everything at beating back Europe's twin threats of ‘deflation' and ‘growth' problems.

In his post announcement press conference Draghi announced the suspension of the “sterilization” of bond holdings, the preparation for the purchases of Asset Back Securities and longer term loans of €400billion. This follows their expected cut to both its benchmark rate (0.15%) and deposit rate (-10% – pushing it into negative territory for the first time in their history).

In translation, everything that was realistically possible to implement they are going to do – the ECB seems to be going for broke. In reality, what's likely to work will be the ABS purchases, but before it can, that market needs to get bigger (more structured and more liquid) as they are really only in the prepping stage. The ECB needs to buy “big” to make any meaningful impact.

EUR trading at new four-month low (€1.3535). The market continues to digest Draghi's comments and is wondering if the ECB is being proactive and aggressive enough. New year low's for the EUR remains on the cards, however we may have to wait for NFP tomorrow.