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What You Need to Know About the ECB Meeting

For every trader, knowing the key dates in the annual economic calendar couldn’t be more important. Around the times of major financial news and data releases, the market is more volatile than usual, and so knowing the precise days on which important economic announcements will be made is essential to being able to plan and place effective trades. While some investors value knowing these dates in order to avoid trading at these times of rapid asset price movements, other traders want to know about these scheduled events so that they can check out predictions and take up positions that they hope will bring them greater profits when the market moves in response to the release. One of these key economic dates is the ECB meeting, and knowing when one is scheduled to take place enables individual traders to make decisions about trading based on their personal preferences with  informed knowledge.

What is the ECB?

ecbThe title “European Central Bank” (ECB) refers to the joint central bank of the 19 different countries within the European Union that have decided to use the Euro as their currency. The primary task of the ECB is to maintain stability in pricing within the Eurozone and to preserve the single currency’s purchasing power. Because stability in prices is key to job creation and economic growth, which are two of the major objectives of the EU, it is representative of the most essential contribution that monetary policy is able to make. The ECB has its own decision-making body, which is called the Governing Council. This body is made up of six Executive Board members and the 19 governors of each Euro area country’s national central bank. The Governing Council meet regularly with the purpose of taking the decisions necessary to formulate Eurozone area monetary policy, as well as taking decisions about interest rates, monetary objectives and reserves supplies within the Euro system, and forming guidelines about how their decisions ought to be implemented.

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Which Countries are Represented by the ECB?

There are 19 countries represented by the ECB’s Governing Council, and there are currently 25 members on the Committee. Here are the members of the Governing Council of the ECB for 2017:

  • Mario Draghi: ECB President
  • Vitor Constancio: ECB Vice President
  • Benoit Coeure: ECB Executive Board Member
  • Sabine Lautenschlager: ECB Executive Board Member
  • Yves Mersch – ECB Executive Board Member
  • Peter Praet: ECB Executive Board Member
  • Jan Smets: Governor, Nationale Bank van Belgie
  • Jens Weidmann – President, Deutsche Bundesbank
  • Ardo Hansson: Governor, Eesti Pank
  • Philip R Lane: Governor, Central Bank of Ireland
  • Yannis Stournaras: Governor, Bank of Greece
  • Luis Maria Linde: Governor, Banco de Espana
  • Francois Villeroy de Galhau: Governor, Banque de France
  • Ignazio Visco: Governor, Banca d’Italia
  • Chrystalla Georghadji: Governor, Central Bank of Cyprus
  • Ilmārs Rimšēvičs: Governor, Latvijas Banka
  • Vitas Vasiliauskas: Chairman of the Board, Lietuvos Banka
  • Gaston Reinesch: Governor, Banque Centrale du Luxembourg
  • Mario Vella: Governor, Central Bank of Malta
  • Klaas Knot: President, De Nederlandsche Bank
  • Ewald Nowotny: Governor, Oesterreichische Nationalbank
  • Carlos Costa: Governor, Banco de Portugal
  • Boštjan Jazbec: Governor, Banka Slovenije
  • Jozef Makúch: Governor, Národná banka Slovenska
  • Erkki Liikanen: Governor, Suomen Pankki–Finlands Bank

How Many ECB Meetings are There During the Year?

In normal circumstances, there are two meetings of the Governing Council of the ECB every month, which are held in Frankfurt am Main in Germany at the ECB premises. Every 6 weeks, the Governing Council is charged with assessing monetary and economic developments within the Eurozone and taking decisions about monetary policy. At all other meetings, the Council meets to discuss issues relating to the other responsibilities and tasks of the Euro system and ECB. Every 6 weeks, there is a press conference held by the President of the ECB, with assistance from the ECB’s Vice President, in order to explain any monetary policy decisions that have been taken at the scheduled meetings. Regular accounts of the policy-making meetings are also published by the ECB before the next meeting is scheduled to be held.

When is the Next ECB Meeting?

Knowing when the next ECB meeting is going to be held is vital information for any serious trader. Here is a table that shows the upcoming dates on which the ECB Governing Council will convene to discuss monetary policy decisions:

ECB Meeting Dates for 2017

Month Date
January 19th
March 9th
April 27th
June 8th
July 20th
September 7th
October 26th
December 14th

Why are ECB Meetings So Important to Investors?

The majority of serious investors use a range of analytical skills, including fundamental analysis, when they trade on the financial markets, and one of the most important parts of this is using economic indicators. The meetings of the ECB Governing Council are essential, as they make financial decisions regarding monetary policy and interest rates throughout the Eurozone that can have a major impact upon the Euro currency. When trading in foreign currencies, this information is essential to know, as there will be exceptional volatility in the money markets around the time of the scheduled meeting, and investors can expect to see the value of Euro currency pairings moving rapidly until the announcement of any decision taken by the ECB Governing Council is released. Being prepared for this volatile time in trading is important for traders, whether they prefer to steer clear of placing a trade at this junction, or whether they prefer to try to capitalise on the volatility and use predictions about the expected outcome of the meeting to make a profitable investment.

Strategies for Trading Economic News Such As the ECB Meeting

The Forex market is especially prone to rapid and short-term movement around the time of important economic news releases, such as the decisions made at the ECB meetings, as the impact of such announcements not only affects the currencies of the countries in question, but also has a knock-on effect around the globe, and will influence currency pairs. Anyone who is serious about trading successfully in the foreign currency market must bear in mind the dates on which such information is going to be released, and plan ahead for how they will trade in the fast-moving market that occurs around this period. While some investors choose to stay out of trading at this time, others are keen to capture breakouts in this volatility, and so reap greater profits.

If you are looking for a simple but effective Forex trading strategy to trade economic news releases, you could try the Whipsaw technique, which is one of the most popular trading strategies around economic announcements like the ECB meeting. One of the issues with trading news is the setting of stop losses, and how to determine how large that stop loss should be, as it could vary wildly in the volatile market around the time of these announcements.

In a whipsaw, prices move up, stopping out short traders, and then move down, stopping out long traders. Being aware of this allows an investor to enter two trades – one long and one short – which are as close as possible to the middle price of the move that is leading up into the whipsaw. The trader should set a take profit on both of their trades of around 10–15 pips in order to limit their risk. They should, however, not set a stop loss, as the take profit is going to become the stop loss. As they are trading with no stop loss, it will make no difference whether the price goes up or down in the first instance, as they will not get stopped out. This only works in the case of a high-impact release such as an ECB meeting, as this indicates that a whipsaw move is highly likely to occur. It is also vital that the market is moving within a tight range before the release of the news, in order for the whipsaw to be a possibility. Another way to maximise profits is to use multiple currency pairs – for example, all Dollar or all Euro pairs – when utilising this strategy, as this spreads risk and creates more opportunities for success.

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