THE TAKEAWAY: EUR European Central Bank Rate Decision > Main Overnight Rate on Hold at 0.75%, as expected > EURUSD BULLISH
Earlier, the European Central Bank kept its key interest rate on hold at 0.75% as expected, while also leaving unchanged its other key interest rates as well as any extraordinary monetary policy measures. For now, it seems, with the Outright Monetary Transactions (OMTs) scheme in place but no official aid request from Italy or Spain, the ECB remains on the outside of the bond market, but stands ready to take action.
ECB President Mario Draghi, on the whole, was unrevealing in his rhetoric, with more of the same in terms of policy outlook being decided today. Inflation is running slightly above the ECB’s medium-term target of +2% year-over-year, President Draghi noted, and that economic growth remains sluggish. Essentially, this was the overarching theme of the presser – that the opposing directions that inflation and growth are moving will keep the main interest rate on hold for now.
EURUSD 1-minute Chart: November 8, 2012
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the press conference, the EURUSD traded higher, from 1.2726 to as high as 1.2757, before falling back to 1.2742, at the time this report was written. The Euro weakened against other major counterparts such as the Australian and New Zealand Dollars, which comes as no surprise given the uptick in broader risk assets after the head of the ECB spoke.
--- Written by Christopher Vecchio, Currency Analyst
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