No surprise from ECB's first week of bond buying, global equities stronger, AUD & ASX chop their way sideways, futures up 46 points

The European Central Bank spent 9.751 billion euros in its first week of quantitative easing (QE), which was exactly what the market was expecting after official comments on the weekend. April 7 is the date that more detail will be released about the make-up of the purchases and, while we're just one week into the new QE round, the ECB did go in lighter during week one than they may have, and questions will probably be asked whether the ECB has bitten off more than it can chew given the move that the EURUSD (black line, first chart) has made since they first announced the '60 billion a month until Sept 2016' plan in January. When the plan was announced, on 22 January this year, the EURUSD pair was trading at over US$1.16. In December it traded at highs above US$1.255. The EURUSD has now slumped to US$1.0560, having hit lows of US$1.046 last week - if this level is maintained or if it falls any lower, will the ECB still feel it prudent to stick with the 60 billion euro per month until Sept 2016?

European quantitative easing can have a very different effect to that of the falling euro, whereby heavily-debt-laden countries like Portugal, Italy, Ireland, Greece & Spain (the notorious PIIGS countries) love the effect of being able to service their debts at much lower interest rates, but it's the big exporters who love the falling euro. And then what of the UK, where around 50% of its exports go to the Eurozone and thus will feel the immediate effect of having a less competitive export economy - the first chart (orange) shows the strengthening of the sterling versus the euro (GBPEUR). The market's swift translation of European QE is going to cause quite a bit of imbalance in Europe and, as mentioned previously, in the US where traders are piling into the US dollar and out of the euro as a QE arbitrage trade (US QE ending, Eurozone QE beginning), thus making the US less competitive than it has enjoyed being since devaluing its currency throughout the post-GFC period.

One thing is likely clear - right now the trend is your friend and it's probably best not to over-think these things in the short term. Will the ECB turn around in the next couple of months and say they can't do a US$1.05 euro AS WELL AS 60 billion a month in QE? Very unlikely. Will Portuguese and Irish stocks continue to fare better than British? Probably. I use this as a simple example for a short-term trade (again - let's predict the ECB continues along the same QE path without any political reversal over the next couple of months), but have a look at today's second chart. Orange line is the UK's FTSE 100, up 3.92% for the year. The blue line (Irish top 20 ETF CFD) and black line (Portuguese top 20 index CFD) are both up around 20% year to date. Are they overcooked? Yes, but what might change to stop this trend? I don't mind the idea of taking a small short FTSE100.I versus long PSI20.I and/or IETF in equal amounts as a trade, but one would have to really ignore the fundamentals and ignore the year-to-date performance of the latter two. It's a high risk idea, but I'll throw it out there nonetheless. You could certainly wait for the first pull-back of 2014 in European stocks if you like, but that could be like waiting for a pull-back in the Sydney housing market. So I'll leave it to you all.

Today's last chart shows the ASX 200 and AUDUSD tracking sideways for the time being, with the ASX 200 likely awaiting more RBA consensus about the next rate hike to move higher and the AUDUSD awaiting the US Federal Reserve's guidance to take a leg lower. We've got RBA March minutes out at 11:30am today and Fed decision/press conference out Thursday morning, both Sydney time. Nice little move higher in iron ore yesterday, I'd like to see a lot more of that.

Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to open a Rivkin Trader account now.

Upcoming economic announcements: Bank of Japan monetary policy statement at 9:30am, RBA March minutes at 11:30am, German ZEW survey at 9pm, all Sydney time.

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