All eyes on ECB

9 December, 2016

ECB Policy

The European currency is at a three-week high ahead of the ECB decision on the monetary policy. The investors are bracing for the last session of ECB in this year, in the anticipation of an extension of the asset repurchase program by the European regulators. This has been moved from March 2017 to further in the future. The main questions are, how long will they extended the program and will a number of asset purchases be unchanged at 80 billion EUR per month.
According to 52 of 60 economists surveyed, the ECB will make a decision to extend the terms of the program.

Bond yields

On the bond markets, the yields of the European countries rose. Swiss government bonds went up +20%, German bonds +7.49%, Japan bonds +10.64%, and US bond yields are a touch-up.

US Dollar

The Greenback extends the correction, DXY falls by -0.33% to a 99.95 level as the expectations of the easing program extension propels the upturn of the stock markets. The currency slid against majors while showing mixed actions against the emerging market currencies.

Asian equities

The Japanese stock index Nikkei 225 dismisses the advances of the Yen rising to 1.45%, as investors bet on the ECB stocks to support reverberating effect on the Asian shares as well.  South Korea equity gauge KOSPI posted gains. Chinese CSI 300 drops with a possible impact from the downbeat trade balance data revealed today.

Market Volatility

The CBOE Volatility index (VIX) remains subdued despite the uncertainty related to the ECB showing -3.68% at the previous close.  The NFP related upsurge has been tamed, as the employment figures didn’t bring much distortion to the timeframe for FED rate increases.

Oil

The bullish mood prevails with the energy market rebalancing, as the OPEC struck the deal of production cuts with a Non-OPEC oil giant Russia. Nevertheless, the growth shows signs of caution as the event related euphoria wears off and traders turn to tracking the fundamental changes in the method of supply&demand. Both benchmarks added 1% on Thursday.


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