The euro has remained bid

October 5, 2016

European Outlook: Asian stock markets are mixed, with Japanese bourses remaining underpinned by a weaker Yen, which is lifting exporters. Hong Kong stocks also extended their rally, in tandem with mainland Chinese markets, amid hopes that China’s economy is stabilising. Elsewhere, however, markets are slightly in the red, and U.S. and U.K. stock futures are also down, despite a pick up in oil prices that saw the front end WTI future rising above USD 49 per barrel. Reports that the ECB council is favouring a tapering of QE purchases, if and when stimulus measures come to an end has spooked markets late yesterday and saw Bund futures dropping sharply, while the EUR picked up and gold fell over 3.3% The reports also said QE could still be extended at current levels beyond the current timeframe, but the reaction highlights how reliant markets still are on central bank support and with the EUR rising above 1.12 against the USD again, Eurozone bond and stock markets are likely to feel the pressure at the open. The ongoing weakness of the pound meanwhile will continue to put a floor under the FTSE 100. The calendar today has the final reading of the Eurozone manufacturing PMI, expected to be confirmed at 52.1 while the U.K. services PMI is seen falling to 52.0 from 52.9 in August.

ECB said to be nearing a consensus that QE should be tapered gradually before the program ends, according to sources familiar with policymaker deliberations today at the interim Governing Council meeting (cited by newswires). One suggestion was to trim purchases by EUR10 bln per month. When such reductions will begin will depend on the economic outlook. And it was also noted that QE, at the current EUR80 bln pace per month, could be extended beyond the March 2017. The ECB also extended its economic projection horizon by 1 year. Meanwhile, in an emailed statement from the ECB, it was noted the Governing Council “has not discussed these topics.”

FX Update: The euro has remained bid following reports that the ECB is considering tapering its QE program. EURUSD lifted back toward the high seen yesterday after the London close, at 1.1218, while EURJPY rallied to fresh three-week high territory above 115.00. USDJPY also managed to clock a new three-week high, at 102.99, with the dollar itself is being underpinned after Fed’s Lacker said a rate hike is needed to head off a likely increase in inflation. (see more below) The yen itself has remained the short of choice in forex markets with the BoJ still seen on course to expand monetary policy, and with stock markets holding up, although mixed in Asia today. Focus is shifting to Friday’s U.S. jobs report for September, as this will have potential to make or break prospects for Fed tightening by as soon as year-end.

Fedspeak: Lacker: said he would have dissented in September because interest rates “need to rise,” a comment that has sparked some ire on Twitter, though note he’s a non-voter and, thus, was denied the opportunity. He agrees that gradual hikes are the prescription, but warns that the median view of 2 hikes in 2017 is “awfully gradual.” Meanwhile, the IMF’s chief economist says there’s no great danger of the U.S. economy overheating. Yields jumped on earlier hawkish headlines from Lacker, on the heels of those of long time hawk Loretta Mester, yesterday.

Publication source
HotForex information  HotForex reviews

December 8, 2016
Banks guidance ahead of the ECB meeting
It seems that everything is clear the ECB will extend its asset-purchasing program, and send the euro lower. But banks smell a rat in this announcement. The ECB should introduce more easing measures...
December 8, 2016
Prepare for the ECB meeting outcome
The currency market has lost some volume, as traders are closing their positions ahead of Christmas and New Year’s celebrations. Investment funds are in no hurry to open new positions; they rather prefer to be actively trading in January...
December 7, 2016
Will ECB support Italy?
The yield of the Italian sovereign debt fell on Tuesday as the focus moved to the political uncertainty on the market. After Renzi’s crash on the weekend and the expectations of the ECB measures to deal with the possible fallout of the financial markets...

 FXTM Rating
Larson&Holz IT Ltd Rating
Grand Capital Rating
HYCM Rating
Z.com Trade Rating
Trade360 Rating

Banc De Binary Rating
OptionFair Rating
OptionBit Rating
365BinaryOption Rating
TopOption Rating
Binary Brokerz Rating