- ECB to Continue Bond Buying Stimulus
- Focus Switches to EU Leader Summit
- European Markets Cautious as Agreement Remains in Balance
The EUR/USD forex market continued to strengthen today above $1.14 as the ECB reiterated its backing on Thursday for the huge economic stimulus plan that it has implemented to support the economy of the bloc. That sees eyes shift to the EU leader summit which opened today in Brussels. Traders will be hoping that a deal can be struck to sign off on the €750 billion EU rescue fund plan as four nations in particular still remain doubtful.
European Central Bank Remains Committed to Stimulus
At the ECB meeting on Thursday, the central bank said that interest rates would remain unchanged in the region, but that plans to continue their emergency bond buying stimulus plan remain unchanged. This measure of support known as the Pandemic Emergency Purchase Program (PEPP), has expanded to a total size of more than €1.3 trillion in purchases to support the economy until June 2021.
This support comes at a time when economic recovery appears to be continuing cautiously in many countries across Europe. While this provides a confidence boost to forex trading and the market overall which cannot be found in the United States, ECB President Christine Lagarde still struck a mindful note by warning that the outlook remained highly uncertain. This, according to forex brokers, tempered trading in the pair as many now await further news on the proposed rescue fund.
EU Leaders Summit Begins Amid Deal Backdrop
The eyes of Europe shifted to Brussels today where leaders meet for crucial talks and to try and get a critical EU rescue fund over the line for the second time. Talks collapsed on a very similar deal in February which would essentially see the region inject funds into areas of the economy which require support to overcome the current economic crisis.
The deal is being held up largely by what have become known as, ‘the frugal four’, a collection of the Netherlands, Austria, Sweden, and Denmark who have so far blocked the passage of the deal. They are concerned about numerous aspects of the deal and particularly its provision as a grant as opposed to a loan which must be repaid. This has worked to anger nations such as Italy, Spain, and Greece who find themselves in great need to assistance.
Chances of Rescue Fund Agreement Remain Slim
European markets largely traded sideways today, in careful hope of a possible deal being reached that would provide a fiscal boost to the whole area. Hopes of an agreement though remain slim as the four nations who have been holding out to date, do not appear ready to give up much ground.
Hopes were not helped by Netherlands Prime Minister Mark Rutte, seen by many as one of the strongest figures blocking the deal. He commented on entering the summit that he sees less than a 50% chance of an agreement. A dismal start to proceedings.
Spread the love