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FX Update: ECB leak and BoC rate cut take markets by surprise

According to a report from Bloomberg, a proposal circulated to the ECB’s Governing Council foresees asset purchases of 50 billion euros a month from March to the end of 2016. The information in the report was attributed to two euro-area central bank officials. Saxo's John Hardy says if true, it will be a large bazooka. He says there was some selling off but then the market recovered.

If the proposal remains unchanged, the ECB’s QE programme would come in at 1.1 trillion euros – double that of market consensus ahead of the meeting and before the Bloomberg report. Speculation that ECB President Mario Draghi will broaden asset purchases had increased after the Swiss National Bank scrapped the cap on the franc last week.

Meanwhile, Bank of Canada has cut its two year rates by 25 basis points. John Hardy says the move was not expected and took the market by surprise. He says it's put CAD on a weaker path compared to USD.

02:49 minutes
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