'Operation twist'
I see the words 'operation twist' popping up in some of the previews and news releases that I'm reading. So what the heck does it mean?
"Operation twist" was a policy that the US Federal Reserve used most recently in 2011 when it was trying to keep long term interest rates down. It is where the central bank swaps short term bonds with longer dated ones to reduce borrowing costs, without increasing their balance sheet.
If Draghi was to indicate that they intended to go down this path tonight, this would be euro bearish.
Something to keep an eye out for.
