Market's expectations met, step one a success for ECB, exits from euro pump up US dollar, equities markets stronger, ASX futures up 64 points

The European Central Bank (ECB) delivered an announcement last night that satisfied markets in terms of its size: 60 billion euro in additional bond purchases per month from March 2014 until September 2016, at least. While equity markets responded positively, they didn't overshoot the announcement, with US markets up around 1.5% and most of Europe about the same. Currency traders took the announcement more seriously, which was evident by the amount of selling in the euro - the EURUSD, pictured in today's first chart, is trading at 1.1355 as I write (down from yesterday's 1.1651 highs), and as you can see from today's second chart that this has had a marked effect on the strength of the US dollar on a relative basis. The US dollar index now sits at 94.62 - this is its highest level since 2003, a statistic naturally shared with euro weakness. The relative weakness of the euro, lower effective yield out of Europe and the subsequent strength of the US dollar will keep a lid on any positive performance of any currencies that cross the US dollar for the moment, with AUDUSD and USDJPY experiencing a touch more weakness today.

While more detail will emerge with regard to the implementation of this additional bond buying, the size of it slightly exceeds what the market had been told to expect, and therefore met what the market actually expected. Some outside bets on the ECB failing to please markets are likely being unwound and will add to the initial 'pop' of this news. What nobody knows, however, is whether the benefits will extend beyond capital markets and through to the real European economies that need a boost the most. The reason why I say that step one is a success is because I'm talking to an audience with exposure to many securities that traded favourably following this announcement; step two, however, is trying to get European growth, inflation and employment back to healthy levels. There is no doubt that positive market sentiment and the avoidance of a negative event will help grease the wheels, but the heavy lifting is still to come. I hope it works - Europe is a drag on the global economy, it is a drag on China and it creates concentration risk as the world looks to a continued recovery in the United States. We all want Europe to succeed.

So what does this mean for equity investors? It's good. This was a big event on the radar, it was an event that had the potential to disappoint due to political discord in Europe, and it was something that no doubt weighed on the minds of investors who are willing to try and time the market. I would expect that cheaper access to funding out of Europe will create flows into higher growth and higher yield economies, and as those opportunistic players who can access money cheaply in Europe begin to implement their economic arbitrage strategies, emerging markets in Asia should benefit. As a result, Australia should benefit too.

Today's last chart shows spot gold, but not in US dollars, rather in euro this time around. As you can see it has already had a heck of a month, but we do know that (while conceding significant differences between the US and European economy and bond markets) this level of quantitative easing will stimulate precious metal markets. With the potential for the US dollar to continue to strengthen (which holds back the price of US dollar spot gold), traders may wish to take a look at XAUEUR or euro spot gold in order to benefit from a weakening euro.

Today’s charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to get your free $100,000 demo account.

Upcoming economic announcements: Japanese PMI out at 12:35pm, HSBC Chinese PMI out at 12:45, third-party European PMI out at 8pm, Canadian CPI out at 12:30am, all Sydney time.

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