Euro weakened broadly over night after ECB launched a massive expansion in the asset buying program that is worth over EUR 1T. EUR/USD extended recent fall to as low as 1.1314 so far while EUR/JPY hit 134.20. ECB's announcement triggered Denmark central bank to cut rates for the second time this week, deeper into negative region at -0.35%. Canadian dollar remained even weaker after the surprised rate cut by BoC earlier this week. And, global easing campaign raised bets on RBA cut this year and sent AUD/USD below 0.8 handle. Markets are pricing in 50% chance for RBA to cut in February, up from prior week's 25% chance. Global equities were boosted by ECB's move too with Dow 30 ended up 259.8 pts, or 1.48%, at 17813.98. S&P 500 closed up 31.03 pts or 1.53% at 2063.15. Nikkei 225 is up over 150 pts at the time of writing.
Exceeding the consensus forecast of 50B euro or 50B euro in total, ECB's expanded asset purchase program would spend 60B euro per month, from March 2015 through September 2016, in both public and private debts. The program aims at combating deflation and would continue until "a sustained adjustment in the path of inflation" is seen. Meanwhile, the central bank decided to change the pricing of the 6 targeted longer-term refinancing operations (TLTROs) remaining in the market and left the policy rates unchanged. The ECB indicated that the key reasons for the decision were to fight against deflation as "inflation dynamics have continued to be weaker than expected". Moreover, the central bank acknowledged that "while the monetary policy measures adopted between June and September last year resulted in a material improvement in terms of financial market prices, this was not the case for the quantitative results". This suggested that stimuli adopted were "insufficient to adequately address heightened risks of too prolonged a period of low inflation". More in ECB Decided to Buy Asset Worth of 60B euro a Month, March through September 2016.
Elsewhere, Japan PMI manufacturing rose slightly to 52.1 in January. China HSBC manufacturing PMI rose to 49.8 in January. Eurozone PMIs will be main focus in European session and are expected to show slightly improvements in January. UK would release retail sales and might trigger some reactions in EUR/GBP. Canada will release CPI and retail sales while US will release existing home sales and leading indicators.