Never miss a story from David Maycotte

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Maycotte

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points

  • ECB Cuts Deposit Rate to -0.10%; Benchmark Rate to 0.15%
  • Euro Falls Against its Major Peers On Announcement
  • ECB President Mario Draghi Holds Press Conference at 12:30 GMT, May Spark Volatility

The European Central Bank (ECB) went beyond a standard refinancing rate cut, cutting its deposit rate to negative territory for the first time in history. DailyFX Currency Analyst says the negative deposit rate would impact around €100B; prompt enhanced forward guidance with promise for future action; and liquidity measures aimed at helping small- and medium-sized enterprises (similar to the Bank of England's FLS).

Early in May the central bank threatened to loosen policy further, provoking a sharp sell-off in the single-currency. Today they made good on their word introducing rate cuts introduced as a measure to lift ultralow inflation and help euro zone’s already fragile economy.

ECB Draghi press conference (at 12:30 GMT) may provide more clarity on the decision, and help to provide a broader outlook in the single currency.

[See:Trade setups in EUR/USD, EUR/JPY, USD/CHF for the June ECB Meeting]

[ECB Draghi headlines, updated after press conference]

  • ECB decided on combination of measures. Introduces QE and unveils package of target LTROS. Package includes preparations for ABS purchases. ECB extends fixed rate full allotment, suspends SMP Sterilization.
  • Considers non-standard tools within mandate.
  • ECB ready to act swiftly if needed. Council unanimous on using further instruments.
  • ECB sees 2014 GDP Growth of 1% vs 1.2%; 2015 GDP Growth of 1.7% vs 1.5%; 2016 GDP Growth 2016 1.8% vs 1.8%.
  • ECB Draghi says inflation was lower than expected, sees inflation at low levels in coming months. ECB cuts inflation forecast. 2014 CPI at 0.7% vs 1%; 2015 CPI at 1.1% vs 1.3%; 2016 CPI at 1.4% vs 1.5%.
  • ECB monitoring exchange-rate developments closely. ECB Draghi says balance sheet adjustment of key importance, urges banks to improve capital, solvency position.
  • For all practical purposes the ECB is at lower rate bound.
  • Banks will have additional reporting requirements, will check how new funds are used.
  • Rates may stay low longer than previously foreseen. Low interest rates will feed into money market, FX.
  • ECB wants to ensure low rates trasmitted to firms.
  • Draghi says Difficult to say when impact of TLTRO will Appear
  • Low inflation due to Food, Energy, Weak Demand
ECB Enters Uncharted Waters with Negative Deposite Rate, Euro Tumbles

Chart Prepared using FXCM Marketscope 2.0

-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to

Want to trade with proprietary strategies developed by FXCM? Find out how with Mirror Trader.