The ECB will target government bonds with maturities of one to three years, including longer-dated debt that has a residual maturity of that length, Draghi said. Purchases will be fully sterilized, meaning that the overall impact on the money supply will be neutral, and the ECB will not have seniority, he said.

The euro fell as Draghi spoke, easing to $1.2586 from $1.2644 beforehand. The yield on Spain's two-year government bond fell to 3.05 percent at 2:12 p.m. London time, after earlier rising by as much as 22 basis points. Italy's two-year rate was eight basis points lower at 2.36 percent.

The ECB has been at the forefront of fighting the debt crisis, which has so far pushed five countries into bailouts and driven the 17-nation euro economy to the brink of recession.

The central bank today forecast a deeper economic contraction for 2012 than it did three months ago. Euro-area gross domestic product will drop 0.4 percent this year instead of 0.1 percent, it said.

Eoin Treacy's view The ECB is following through on its commitment to do what is necessary to ensure the survival of the single currency. While the total amount injected will be sterilised, the ECB cannot dictate how the effect of its actions will be multiplied and where additional liquidity will be put to work.

As investors seek to benefit from this development the clearest route is a contraction of short dated peripheral spreads as upward pressure is put on Spanish and Italian bond prices and the German Schatz (which until today was trading at a negative yield) loses its appeal.

The Spanish 2-year spread over the German 2-year has almost halved since July and a clear upward dynamic would be required to question potential for a further contraction.

The Italian 2-year spread over the German 2-year hit a medium-term peak near 440 basis points from June and continues to contract.

As existential anxiety focused on the Euro subsides, at least for the moment, US Treasuries are also coming under pressure. The 30-year future had become overbought in the short-term as it tested the peak near 153 and today's downward dynamic suggests a return to supply dominance.

Both gold and oil represent assets where additional supply cannot simply be printed into existence. Brent crude has been ranging above $110 for almost a month and has firmed near the lower boundary. A sustained move below $110 would be required to question potential for an additional test of overhead trading. Gold broke back above $1700 today and a sustained move below $1650 would be required to question medium-term scope for continued upside.

The DAX broke out of its short-term range today to test the March high and a countermanding downward dynamic would be required to check potential for continued upside.

The S&P 500 hit a new high for the year today and here also a countermanding downwards dynamic would be required to check potential for additional upside.

The FTSE-100 also rallied impressively today to confirm another higher reaction low within the context of the three-month uptrend. A sustained move below 5600 would be required to question medium-term scope for continued higher to lateral ranging.

The S&P/ASX 200 future rallied impressively today to also confirm another higher reaction low.

In conclusion, the last three years has been characterised by increased volatility both up and down. The evolution of perceptions of when liquidity is going to be added and when it will be withdrawn has tended to be a causal factor in how risk assets perform. The pattern in stock markets has been for persistent rallies that last for as long as liquidity provision is the dominant theme. Swift, deep pullbacks have tended to follow when liquidity is withdrawn. This environment has been reflected in the “risk-on, risk-off” parlance that has become so popular over the last few years. Peak to trough swings have additionally been exacerbated by HFT trading.

At present liquidity is being provided at an accelerating rate, so the benefit of the doubt can be given to the upside. When that condition changes risk assets will command an additional risk premium.