Research Team at TDS, notes that the ECB left policy on hold, but gave as clear an indication as possible that further easing is likely in March.
“The principal driver of their shift in view was low 2016 inflation on the back of oil, alongside downside risks to growth from heightened uncertainty and geopolitical risks.
Given the points made in the statement and by Draghi in the press conference, we now expect the ECB to cut the deposit rate by 10bps in March, with a 30-40% chance of a further 10bps either in March or June, but extensions or augmentations to QE still seem unlikely at this point.
With potential for changing market dynamics in the coming weeks, we take profit on our 10y bund-Treasury tighteners at 156bps, will look for better re-entry levels later, and expect our ERZ6/ERZ7 flattener to continue to perform and would expect to hit our target there by March.”
December 7, 2016 GBP falls as industrial & manu. production miss
The pound has come under pressure in London trading today. EURGBP buying has been a driver, with the cross rallying some 0.5% to a peak of 0.8510, since ebbing to around 0.8490. Gains failed to sustain above the 20-day moving average, which is at 0.8503...
December 7, 2016 Unexpected fall in UK economic indicators
This morning saw a substantial drop in both the manufacturing production and industrial production in the UK for the month of October which comes as a timely reminder that the economy remains vulnerable. The pound ended its recent rise against the US dollar yesterday after hitting a 2-month high...
December 7, 2016 U.S. dollar recovers from Monday lows
The U.S. dollar index managed to recover from a 14-day low on Monday at 99.87 with prices turning bullish yesterday. However, the gains remain limited within Monday's range with further upside likely to see the 100.80 resistance being established...
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