In US trade, the euro extended its slow grind higher as investors continued their intense focus on what form the ECB's new bond-buying programme will take.
Despite the composite-European manufacturing PMI coming in slightly weaker than expected, European equities and the euro itself managed to move higher on speculation that Mario Draghi, will at the very least, announce a framework for the ECB’s bond purchasing programme at Thursday’s central bank meeting. In a preview of what might come, Mr Draghi last night claimed ’bonds with a maturity of up to three years would not be state financing‘. Yields on two-year Italian, Spanish, and Portuguese debt each fell over 10 basis points in response.
Based on this, it is not a stretch to suggest that the euro's reaction to the ECB's press conference on Thursday will be largely determined by the range of tenors which are declared eligible for purchase under the new programme. Having ended yesterday’s Australian session around the 1.2575 level, the euro pushed up to a session high of 1.2611 before settling US trade at 1.2593. Upon reopening for Asian trade the euro is essentially unchanged.