ECB words dominate actions

11 March, 2016

The phrase of yesterday was ‘kitchen sink’, which for those not familiar, comes from the English expression for throwing everything at a problem. That was the approach of the ECB to the slow growth, low inflation and falling inflation expectations of the Eurozone. The currency reaction was very telling. The euro was initially weaker, on the basis that the measures went further than was generally anticipated, but interest rate markets look a different view (yields rising) which eventually over-whelmed the currency and dragged it higher in response. Furthermore, Draghi’s comment that “we don’t anticipate it will be necessary to reduce rates further” fuelled the re-bound in the single currency that ensued. This left the single currency nearly 2% firmer against the dollar than before the meeting, which I’m sure is not the reaction that the ECB either wanted or expected.

For today, markets are still likely to be absorbing the impact of yesterday’s ECB announcements. Equities were also on something of a roller-coaster, with equities having been up around 3.5% (Eurostoxx 50) before ending the session in negative territory. There are no key data releases for the US or Eurozone, with the Canadian jobs data the main focus, especially given the less dovish message emanating from the Bank of Canada earlier this week when it kept rates on hold. The CAD has been a little more consolidative in recent days after the strong recovery seen over the past two months. USDCAD support comes in initially at yesterday’s low of 1.3229.


Source link  
USD Bears Return

USD bears returned to the market as the tensions between North Korea and the US have greatly cooled this week. North Korean media reported that North Korea Leader Kim had delayed...

USD Bears

On Wednesday, St. Louis Federal Reserve President Bullard (a non-voting member of the FOMC) stated in an interview that he, is opposed to further U.S. interest rate increases by the Federal...

Oil & GBP slide lower

Oil continues to be under “over supply” pressure resulting in prices dipping to 7 month lows. Yesterday Oil suffered a 2% drop as the increased supply...


Brexit Negotiations to be Triggered

Although Theresa May has stated before no deal is better than a bad deal, Chancellor said on Sunday that...

Markets mixed following averted shutdown

Global equities rose with U.S. futures, fixed income retreated...

Gold Bears Test Near Term Major Support

Gold spot price has turned bearish since 27th Feb, after hitting a one-and-a-half month high of 1263.73...


GBPUSD Retreats Post Surge on Theresa May’s Hard Brexit Speech

Trump stated on Tuesday that a strong dollar is risky to the US economy, as it weakens competitiveness of US exports and corporate profits...

The dominant dollar

The dollar appreciated a further 1% through the course of Thursday in the wake of the Fed meeting result seen Wednesday evening. We saw some pull-back into the NY close and again through the Asia session...

Crossing the Bridge

The usual bridge day between Thanksgiving and the weekend arrives which will keep volumes light and ranges on the tighter side, all being well. That’s unless you are a retailer, in which case this is known as ‘Black Friday’, a phenomenon that has crossed the Atlantic in recent years...

  


Share: