The highly anticipated European Central Bank (ECB)
meeting has concluded and was not without some fireworks.
The ECB cut the deposit rate to -0.1 percent from 0.0 percent
effective June 11.
The ECB also lowered the refinancing rate to 0.15 percent from
0.25 percent and the marginal facility interest rate was lowered
by 35 basis points to 0.40 percent. The negative deposit rate is
the headline grabber as it is the first time a major central bank
has lowered an interest rate to negative territory.
The goal was to spur growth in the economy via lending and
increased spending. The secondary goal is to help fight
This week the growth for the Eurozone for the first quarter
came in at a paltry 0.2 percent with inflation at 0.5 percent,
well below the central bank's goals.
Euro Hangs In The Balance Ahead of ECB
The move has ETFs that focus on the region on the move on
The Rydex CurrencyShares Euro ETF (NYSE:
) was lower at the open but has since moved into positive
territory as it appears to be a "buy the rumor, sell the news"
situation. In this case investors were selling the Euro in
anticipation of the ECB meeting and once the announcement was
made the Euro moved in the opposite direction.
European stocks continue to hold onto their gains as the SPDR
Euro Stoxx 50 ETF (NYSE:
) is up about 0.75 percent in early trading. The biggest winner
in the region is the iShares MSCI Italy ETF (NYSE:
) with a gain of 1.4 percent.
The largest non-Euro country in Europe, the iShares MSCI
United Kingdom ETF (NYSE:
) is unchanged on the day as it is not as affected by the move
made by the ECB.
Overall this should be positive news for European stocks as
the monetary move looks to stimulate the economy.
On the flipside, in theory, it should put pressure on the Euro
versus other currencies around the globe.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.