ECB

•  SAYS FULL ALLOTMENT REFIS FOR AS LONG AS NEEDED
•  TO CONTINUE FULL ALLOTMENTS AT FIXED RATE
•  TO RE-WIDEN INTEREST RATE CORRIDOR T0 200-BASIS POINTS
•   TO REDUCE DEPOSIT RATE TO 100-BASIS POINTS BELOW KEY
•  TO LIFT MARGINAL LENDING RATE TO 100-BPS ABOVE KEY RATE
•  INTEREST RATE CORRIDOR WILL BE WIDENED AS OF JAN. 21

I assume this will give the ECB more leeway with their target rate presumingly to the downside.  The EURUSD originally rallied but has since declined.   The 1.4420 level was the closing level for the day yesterday.  The move down has moved to 1.4415 so far. 

ECB's Liikanen: World economic outlook has 'rapidly deteriorated'; sees uncertainty in growth outlook 

• ECB WILL CONTINUE TO DELIVER PRICE STABILITY
• RISKS TO GROWTH OUTLOOK ON DOWNSIDE
• ECONOMIC OUTLOOK EXCEPTIONALLY UNCERTAIN
• SLUGGISH DOMESTIC DEMAND MAY PERSIST FOR SEVERAL QTRS
• INFLATION RISKS MORE BALANCED THAN IN PAST
• INFLATION TO BE BELOW 2% IN MEDIUM TERM
• ECB MUST PROTECT ITS OWN INTEGRITY, BE CAUTIOUS
• INTERBANK LENDING RATES ARE TOO HIGH
• ALL CENTRAL BANKS ARE ACTING APPROPRIATELY
•  ECB HAS HAD LOWER RATES THAN BOE IN PAST
• INFLATION PRESSURES DIMINISHING FURTHER
• ECB WILL CONTINUE TO DELIVER PRICE STABILITY
• RISKS TO GROWTH OUTLOOK ON DOWNSIDE
• ECONOMIC OUTLOOK EXCEPTIONALLY UNCERTAIN

Trichet is speaking at European Parliament

ECB's Nowotny : ECB will not be pressured on interest rate policy, Favors steady hand tactic in its policy; last weeks rate cut was a relatively big step 

ECB's Gonzalez -Paramo: Worsening of global financial market crisis is likely, cannot exclude more easing in monetary policy- Euro-Zone and Spain are in recession

- Recovery to be slow and moderate; sees growth in 2010
- Financial measures real impact to lag at least 2 years
- Underlying domestic inflation pressures still remain
- ECB cannot lose control over inflation
- Inflation outlook strongly linked to oil prices
- Rate cuts reflect lower inflation risks, forecasts show inflation risks receding

• 2010 INFLATION BETWEEN 1.5%-2.1%
• 2009 INFLATION BETWEEN 1.1%-1.7%; PREV 2.3%-2.9%
• 2010 GROWTH BETWEEN 0.5% TO 1.5%
• 2009 GROWTH BETWEEN -1% TO 0; PREV 0.6%-1.8%
• 2008 GROWTH BETWEEN 0.8%-1.2%; PREV 1.1%-1.7%
• FORECASTS ASSUME 2010 AVG OIL PRICE $76.6/BARREL
• FORECASTS ASSUME 2009 AVG OIL PRICE $67.3/BARREL
• '10 EXPORTS GROWING 2.3%-4.9%; IMPORTS 1.4%-5.2%
• '09 IMPORTS GROWING -1.9% TO 1.1%
• '09 EXPORTS GROWING -1.4% TO 1.0%
• '08 EXPORTS GROWING 2.4%-3.4%; IMPORTS 2.0%-3.0%
• 2010 GOVT CONSUMPTION AT 1.3%-1.9%
• 2009 GOVT CONSUMPTION AT 1.3%-1.9% VS 1.3%-1.9%
• 2008 GOVT CONSUMPTION AT 1.9%-2.3% VS 1.5%-1.9%
• 2010 PRIVATE CONSUMPTION BETWEEN 0.6% TO 1.8%
• 2009 PRIVATE CONSUMPTION
  

The ECB announced the changes to growth and inflation.  The growth target was lowered to -1.0% to 0% versus previous estimate of 0.6%-1.8% growth.  For inflation, they expect that 2009 inflation will be between 1.1 and 1.7% versus 2.3% and 2.9%. 

Personally, this may even be too optimistic as the run off of 2008 increases, will most likely not be replaced with higher values as growth and pricing power erodes.  As a result YoY inflation has the potential to move closer to 0.0% in the 1st half of 2009.

 JUNCKER CALLS ECB RATE CUT GOOD DECISION

No comments from Trichet yet.

Well.... maybe 75 was priced in despite the talk of only a 50 basis point cut.  The low has been 1.2617.  The high 1.2648.  The 100 hour moving average comes in at 1.2674.  The low for the day is 1.2549 which is also the low for the week.  There is trendline support off the 4 hour chart at the 1.2450 area. 

The ECB has cut interest rates to 2.50% from the previous 3.25%.  A cut to 2.75% was forecast.

The EUR, despite a larger than expected cut, got a touch firmer initially across the board after this release.  The follow up ECB Press Conference will be at 8:30 AM EST and expect traders to be watching this closely.