Before ECB rate announcement and in G20 expectations, major currency pairs are being traded without any clear trend. The exception is dynamics of GBP, which grew on Wednesday afternoon, after release of stronger British PMI index than it had been expected.

Possibility of ECB rate lowering is very high on Thursday. The base rate can be reduced by 0.50% down to new record low level of 1.00%. Market participants take this possibility into account while setting the prices, and this fact will gradually increase pressure on the common European currency before ECB meeting on Thursday.  According to rumours circulating in the market, as inflation rate is lowering and Euro-Zone economy continues reducing, ECB Managing Council is ready to decrease the rate down to 1.00% on Thursday. However, in case if the rate is lowered only by 0.25% down to 1.25%, we can witness the common European currency strengthening. It is required to keep an eye on Trichet` s press-conference, since EUR will fall sharply, if ECB announces that it is going to take measures for quantitative smoothing. During ECB last meeting, market participants already received the signal about discussion of non-standard measures by the Managing Council members. It can be announced about the measures either this week or during the nearest future weeks.

After downfall to 1.37 USD per EUR, the American currency has partially won back its lost positions.  Nevertheless, EUR value higher than 1.30 USD can be regarded as a positive event for the common European currency. The results of G20 meeting to begin in London on April 2 will be very essential for long-term outlooks of the world major currencies. Currently a range of countries, including Russia, China, etc., want to discuss the possibility of a new reserve international currency creation. The discussion process is expected to be long, and we will hardly hear about some actual steps in the nearest time. However, as more and more countries will support the idea, USD role will be strategically reviewed. As a result, the American currency will lose its today importance.

For a short-term outlook, the instability preserved in financial markets may favour ESD. An additional factor which can impose positive or negative influence on EUR value is dynamics of stock indexes.

Have a nice day! Alex Sabodin.                                                    

Pro Finance Group Inc.