ECB holds the rate unchanged with the pressure on Draghi

21 October, 2016

After a brief upturn seen in the late Asian trading, the currency retreats to the Wednesday close showing a tepid response to the ECB policy update. The New York FED leader William Dudley comments offered a support toВВ the Dollar rally although the focus remained on the US inflation, employment data, and economic data, which is expected to be the solid foundation for the Decembers rate hike estimates.ВВ The US Dollar index, which reflects the performance of the currency against six other majors, rose by 0.07% as of 12:00 GMT.

The European Central Bank

The ECB left the interest rate unchanged at 0.0%, which is in line with the overall expectations although the investors will be looking for hints in the bond-purchase plan change. It is expected thatВВ the purchases in March 2017 will curtail, although the sluggish economic growth in EU and the inflation (which has been routinely missed) will likely urge the policymakers to keep the stimulus for some more time.

United Kingdom

In September, the Retail Sales in the UK slowed their growth, with the year-to-year change dropping to a 4.1% from the previous 6.6% growth in August. The headline reading missed estimates and sentВВ the Pound to a steep decline, GBP/USD -0.28% at 1.2256 level. As it is one of the key inflation gauges, the weak retail sales data fanned speculations that the BoE is forced to make another financing rate cut in the upcoming meeting.

Oil

The Crude Oil futures soared during the New York trading hours on Wednesday as the weekly EIA update surprised the markets with unexpected declines.ВВ The commercial crude inventories fell by 5.2M barrels, while the analysts on the other hand predicted that would grow by 2.1M barrels. The gasoline supplies rose while the refineries operated atВВ 85% of their maximum capacity. The crude reserves have been declining for seven consecutive weeks, except for the week ending on October 13, which signalled a languid shale production in the US. Together with the potential OPEC freeze it eased the major surplus concerns. On Thursday, crude prices retreated as the traders preferred to take profit from the leap, WTI -1.51%, Brent -1.58%.

Australian Employment

The AUD/USD pair tumbled by 0.75% as the jobs growth inВВ September averaged around 9.8KВВ falling short of the analysts’ consensus of 15.0K. The unemployment rate declined to 5.6%, which was 0.1% better than estimated.


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