The euro remains under pressure against the dollar after the ECB announces a new large-scale asset purchases programme and has fallen to under $1.09 this morning. Sterling has lost considerable ground against the US currency, which is very much on the front foot generally, trading at a multi-year low of around $1.15. This leaves the pound at 94p to the euro, its weakest level since the Great Financial crisis (GFC) in 2008
Stocks had a pretty torrid day again yesterday with European and US indices shedding 5-6%, bringing their decline year to date in 2020 to between 26% and 36%. In the bond markets, German 10-year yields are more than 10bps lower at -0.36% after the ECB’s announcement, and notably, equivalent Italian yields are almost 90bps lower at just over 1.54%
As part of a new temporary Pandemic Emergency Purchase Programme (PEPP), the ECB will purchase private and public sector bonds in an amount up to €750 until it “judges that the Covid-19 crisis phase is over” but in any case the programme will not terminate “before the end of the year”
Announcing its decision, the ECB said it is “fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy through this shock”
The annual rate of inflation in the Euro Area dipped to 1.2% in February from 1.4% in January while the core rate ticked up to 1.1%.
Data due today include construction output in the Euro Area and jobless claims in the US