After the emergency meeting, the European Central Bank (ECB) issued a statement announcing that it will use what it receives for PEPP holdings flexibly. The euro fell after the meeting.
ECB in emergency but not so much
In the statement, the Governing Board reported that it met to exchange ideas on the current situation of the markets. They see risks of “fragmentation” which is why they decided to apply flexibility with the reinvestment of the PEPP portfolio (Pandemic Emergency Purchase Program), to preserve the functioning of the transmission of monetary policy.
The ECB also announced that will speed up the program to prepare a new “anti-fragmentary” instrument for consideration by the Governing Board.
When the emergency meeting became known, the euro reached a peak that included highs above 1.0500 in the EUR/USD and above 0.8700 in the EUR/GBP, but then it was losing strength and trading at 1.0430 and 0.8640 respectively.
Stocks in Europe remain in positive territory, with the Italian FTSE MIB index leading the gains with 2.95% and the DAX up 1.30%. Italian bonds are rising although they have moved away from the highs of the day. The 10-year yield returned to the 4% zone.
Source: Fx Street
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