The ECB cut key benchmark rates to 0.15 percent from 0.25 percent and the Euro marginal rates to 0.4 percent. Lastly, overnight lending of deposits rate to negative 0.1 percent.

Market Reaction

The Euro reacted initially by dropping versus the dollar and appeared to make a run at an almost full percentage point down to 1.35euro. The Euro traders and bears could not push the currency beyond the 1.35euro price. This would have been a breach of February lows and entered the lowest level for 2014.

The Euro currency is trading at 1.362 at Noon in New York trade versus the Dollar.

European bonds reacted with immediacy, as well as the US Bond markets to the ECB news. The 10-year US Treasury saw immediate selling, raising US rates briefly. As Mr. Draghi started his news conference investors went back into buying of Treasuries. This follows in the US continuing from last week as steep sell off from Highs achieved towards the end of May. However, German, Italian, Spanish and French bonds all had rates drop precipitously to multi year lows.

The spread between Spanish and German bonds have reached their narrowest since the summer of 2010.

Italian shorter term bonds, 2-year and 5-year bonds also dropped in yields.

This effectively means a large amount of interest in buying various European bonds across the 28 country Union. Bonds and Yields trade in inverse relationship to each other. As yields go down prices Bonds go up and vice versa, as yields go up bond prices go down.

Currency, ECB, Euro, Mario Draghi