ECB Sets to Renew Its Bond-Buying Program

The European Central Bank or ECB takes the spotlight as the bank is just days ahead from renewing its bond-buying program. This time around, the ECB has no stated end-date for its “QE infinity.”

The inflation gap of the eurozone came in smaller at 0.7%, and the balance sheet expansion turned more moderate, according to reports.

The balance sheet of the ECB is equivalent to 40% of the eurozone’s gross domestic product or GDP. The proportion has also doubled since the bank’s quantitative easing program launched in 2015.

These will also be a new challenge for the next head, who is Christine Lagarde of the IMF. The 63-year-old French lawyer will take Mario Draghi’s place on November 1, 2019.

Lagarde will have to make her way through this new path while seeking consensus in a divided governing council.

Unfortunately for the former head of the IMF, the eurozone inflation is nearing a three-year low. The situation could then push the bond purchases to run for several more years.

And earlier today, euro zone bond yields rose in the first half of Monday’s trading. The information came from a source close to the French President Emmanuel Macron.

Effect on the Euro

The news from the ECB and the eurozone bond yields helped the single currency gain in today’s trading. The euro gained against the greenback, Swiss franc, Japanese yen, and British pound.

The EUR USD exchange rate rose 0.14% or 0.16 points in sessions. The EUR USD pair currently trades for $1.1094 and has reached levels from $1.1076 to $1.1097.

And the EUR GBP trading pair also rose 0.14% or 0.0012 points this Monday’s trading. The pair climbed to levels between £0.8628 and £0.8650 in the sessions.

Meanwhile, ECB news also supported the EUR against other safe-haven currencies such as the Swiss franc and Japanese yen. The EUR CHF pair gained 0.23% or 0.0026 points and the EUR JP.