3 key things to watch for from the ECB

As we head to the ECB announcement, here's 3 things to watch for

First and foremost, there's absolutely no expectation for any change to monetary policy. The price moves will come in the presser when we get Draghi's updated thoughts.

Here's 3 things that could be key for price moves.

1. Inflation

Probably the biggest of the lot. As Inflation keeps climbing, Draghi faces a battle keeping expectations on the ground. Remember though that he's in a win win situation. If inflation falls back because it turns out to be temporary, he wins. If he's wrong and it becomes sustained, he wins, as that is what the ECB is looking for and why they are doing QE. Either way he comes out smelling of roses.

The price will move on how markets perceive the strength of rhetoric in playing down inflation. If he wavers and hints that CPI might be more sustainable than they thought, the euro is going up. If he maintains the same level, that's neutral to mildly bearish.

2. What's getting the chop in April

The ECB are tapering QE in April. Last month Draghi said that they were still discussing what they would cut back on. We're in March so time is running out before they tell us what will be cut. He may kick the can to the April 21st meeting but expect to get more details than last month. The market will be watching to see what gets cut. Gov bonds is the big ticket item and if they get cut back significantly, that could lead to some bond selling by longs who were getting a free lunch from the ECB. That effect can have an FX effect but it depends on where those sale proceeds go, either into another EU asset (stocks) or another country's stocks and bonds.

3. Forecasts

The updated staff projections.

Yesterday there were stories doing the rounds that the new ECB inflation forecasts were leaked, and that they were higher. Unfortunately there's nothing in them to trade. Draghi has been preaching that they expect higher inflation this year, so naturally there's a very good chance that the forecasts will reflect that. On this occasion, that "leak" isn't a scoop we can trade on. What might surprise markets is if the forecasts come in higher than the leaked numbers. The only real trade is if the market is trading the leak, and the forecasts come in lower, then we could see the euro move lower too.

In the first instance, we'll see if there's anything relating to the above in the announcement (usually there's nothing), otherwise we'll have to wait for the presser, which you can watch live here.