• ECB leaves stimulus unchanged
  • ECB open door for further stimulus in December meeting

As economists expected, there was very little new from the ECB on Thursday’s meeting.

The ECB decided that the interest rates and Quantitative easing unchanged. On the main refinancing operation and the interest rates on the margin lending facility and deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.

The monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary

In the Press conference, Draghi said, “A continued moderate steady recovery of the EA economy and a gradual raise in the inflation in line with our previous expectations”

Euro area annual inflation was 0.4% in September 2016, up from 0.2% in August. In September 2015 the rate was -0.1%.

The ECB remains committed to preserving the very substantial degree of monetary accommodation

In December the Governing Council’s assessment will benefit from the new staff macroeconomic projections extending through to 2019: The December meeting will guide what the ECB is going to do in the coming months.

Economic analysis:

The latest data point to continued growth in the third quarter of 2016

We expect the economic expansion to proceed at a moderate but steady pace.

Real GDP in the euro area increased by 0.3%, quarter on quarter, in the second quarter of 2016

The risks to the euro area growth outlook remain tilted to the downside and relate mainly to the external environment.

There are no signs yet of a convincing upward trend in underlying inflation.

Euro area annual HICP inflation in September 2016 was 0.4%, up from 0.2% in August, according to Eurostat

Inflation rates are likely to pick up over the next couple of months

Monetary analysis:

M3 continued to increase at a robust pace in August 2016, with its annual rate of growth standing at 5.1%

Non-financial private sector indicates some further improvements.

The euro rallied initially, but the spikes end with bearish bids and the euro changed the direction toward its lows.

ING Group (ING): suspense left to the market still Draghi, the ECB is expected to expand the QE program in December.

Conclusion: After the Press conference the euro sinks to four-month lows. Lack of adequate information regarding no further cuts, tampering and expansion of QE. During Draghi speech the euro jumps to 1.1040 but during Q&A session, tumbles to 1.0915.

After the Press conference, German 10-year bond yields retreated days earlier three basis points of the increase, and in turn fell 3 basis points to -0.010%; Italy 10-year yield fell 1.5 basis points to 1.367 percent, reported by Wallstreetcn.

The Eur is trading at 1.0925 on early Asia session. The major has near support zone remains between 1.09/10890 below, these 1.0850 and 1.0810 exists.

The resistance zone seems between 1.1040 and 1.1070 the bulls need to settle above these to escape 1.08 levels.