Reports are emerging about a program of monthly bond buys, but the time frames differ. Estimations were between 30 to 40 billion per month, so 50 is a lot. However, if the total value of the program is only 600 billion, lasting one year (according to one report) it is not a lot. If it last until end 2016 it is 1.1 trillion.
EUR/USD reacted to the confusing headlines with a big drop followed by a big leap. The range is between 1.1560 to 1.1680 and trades at 1.1640 at the time of writing. The pair seems to stabilizing on higher ground. Update: after the rush up the pair begins sinking once again. Is the 1.1 trillion version taking hold?
ECB QE Live Blog – over €1 trillion in total, decentralized but broad consensus – EUR/USD crashes
Analysis: 5 points on why Draghi more than delivered and EUR/USD has lots more room to fall
When the SNB explained the shocking move, they released 3 hints that the ECB program would be really big. Even before the SNBomb, expectations were elevated enough, around €500 billion. It is fair to say that expectations have risen since then. So, 600 instead of 500 is not such a big deal, but the T word is the game changer.
The news differs between a time frame of up end 2016 that means 1.1 trillion and one that will last only one year, which means only 600 billion. This is a big difference.
The strongest impact would be a program without a time limit. Another option would be to limit it to 25% of national debt, and that would theoretically surpass 2 trillion.
The reports come from Bloomberg and the Wall Street Journal.
There could be opposition to this move from German officials. The discussions are probably very intense and somebody had an interest to leak the potential options. It is unclear who leaked and what is the motive, but leaks are not too uncommon.
Draghi Day – all the articles towards the expected QE decision
Here is how it looks on the chart:
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