Dow Jones Outlook: ECB Policy May Decide Index's Next Move

(MENAFN – DailyFX) Dow Jones Outlook Talking Points: The ECB is expected to weigh on another round of quantitative easing through its offering of TLTROs Another round of liquidity injected into European markets may have a knock-on effect for the US and thereby Dow Jones Conversely, no stimulus could weigh on the outlook for European indices and pressure the index as it sits in precarious territory See how IG clients are positioned on the Dow Jones, Crude oil and the US Dollar with our free IG Client Sentiment Data.

Dow Jones Outlook: ECB Policy May Decide Index’s Next Move Global markets will look to commentary from the European Central Bank’s President, Mario Draghi, following the group’s policy decision Thursday on both interest rates and policy regarding targeted longer-term refinancing operations (TLTROs). While no change in rates is expected, language regarding the exact pace of future changes will likely influence the outlook for the Euro . Further, a decision to pursue TLTROs could spark greater price action in broader markets including equities than that of mere tone and language regarding hikes.

Chart prepared by John Kicklighter

Although the ECB ended its previous round of QE in December 2018, some central bank officials have discussed implementing another infusion as European growth and inflation trend lower. If the bank does announce another round of TLTROs, it would equate to a materially dovish development from the central bank and would likely pressure the Euro as supply of the currency increases. In turn, such a decision could bring about an improvement in global risk appetite as markets weigh the consequences of monetary stimulus in the bloc which is effectively the world’s second largest economy.

US Dollar Price Chart: Daily Time Frame (January 2017 March 2019) (Chart 2) EURUSD Price chart overlaid with Fed Funds rate

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