Market Roundup
- Wall St down more than 1% after ECB action, Yellen signals growing likelihood of a Dec rate hike.
- U.S. yields rise after ECB disappoints; 2-year at 5-year high.
- ECB cuts deposit rate 10bps (to -30bps), extends APP program to Mar ’17, keeps monthly allotment steady.
- ECB to include EUR denominated regional & local govt debt, ECB to reinvest principal pmts.
- ECB leaves 2016 GDP growth forecast at 1.7%, raises ’17 GDP forecast to 1.19 from 1.18%.
- ECB did not see need to increase monthly QE spend because of other moves -Draghi.
- Fed’s Yellen: more stimulative fiscal policy would give Fed more scope to respond to econ shocks.
- Fed’s Yellen: Under 100k jobs/month enough to keep up with population trends: much of low inflation is transitory.
- ECB’s Mersch: ECB’s move is reasonable, door open for more action.
- Saudi floats idea to lift oil prices but Iran, Russia reject cuts.
- Janus’ Gross: central banks are casinos printing money as if they were manufacturing endless numbers of chips never to be redeemed, urges investors to de-risk portfolios.
Looking Ahead – Economic Data (GMT)
- 00:30 Australia Retail Sales MM* Oct forecast 0.5%, 0.4%-previous
- 01:30 Japan Overtime Pay* Oct 1.4%-previous
- 05:00 Japan Cons Confidence. Index *Nov 41.5-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.0900 levels and currently trading at 1.0944 levels. The pair has made session high at 1.0980 and hit lows at 1.0518 levels.The euro rose against the dollar gaining all the lost ground suffered this month against dollar on Thursday after the European Central Bank cut its interest rate on deposits by just 10 basis points, affecting euro short sellers who had betted a sharp move euro surged against the dollar to $1.0980, its highest level since Nov. 4, after the decision and ECB President Mario Draghi’s comments at a press conference. The euro was last up 2.71 percent against the dollar at $1.0902. Draghi said in the press conference that central bank could make another attempt later if needed and described the decision to reinvest principal repayments on bonds it has already bought to maintain liquidity as very significant. To the upside, immediate resistance can be seen at 1.0980. To the downside, immediate support level is located at 1.0905 levels.GBP/USD is supported in the range of 1.5105 and currently trading at 1.547 levels. It reached session high at 1.5154 and hit low at 1.4919 levels. Sterling surged against dollar on Thursday by gaining more than 1 percent after the European Central Bank’s monetary easing measures fell short of market expectations, prompting speculators to trim hefty bets against the single currency. The ECB extended its asset-purchase programme, by six months to March 2017, but did not beef up monthly purchases as many had hoped. It also agreed to buy euro-denominated municipal and regional bonds and cut its deposit rates by 10 basis points to -0.30 percent, although this was less than money markets had priced in.The euro’s gains helped the sterling regain the all lost ground against the dollar. Sterling had fallen to a 7-1/2 month low of $1.4897 on Wednesday, hurt by weak economic data which had raised doubts over strength of UK economy. To the upside, immediate resistance can be seen at 1.5190. To the downside, immediate support level is located at 1.5120 levels.USD/JPY is supported around 122.00 levels and currently trading at 122.67 levels. It peaked to hit session high at 123.37 and made session lows at 122.22 levels. US dollar slipped sharply lower against Japanese yen on Thursday, after the European Central Bank cut its deposit rate on Thursday in its latest effort to revive lending and inflation in the euro zone. Meanwhile, the ECB also cut its deposit facility to -0.30 percent from -0.20 percent, a move designed to stimulate lending by increasing the penalty on banks that leave their excess cash with the ECB. The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit 97.955, its lowest level in nearly a month, before paring losses slightly. The dollar also hit a nearly one-month low against the Swiss franc of 0.99890 franc. Against the yen, the greenback was last down 0.23 percent at 122.960 yen. To the upside, immediate resistance can be seen at 120.80. To the downside, immediate support level is located at 120.30 levels. USD/CAD is supported at 1.3315 levels and is trading at 1.3341 levels. It has made session high at 1.3405 and lows at 1.3315 levels. The Canadian dollar firmed against the greenback on Thursday, helped by a rebound in crude oil prices, but fell sharply against the euro after additional easing measures from the European Central Bank were less aggressive than some investors had expected. Oil prices rebounded from near-2015 lows after OPEC official said Saudi Arabia would next year propose a deal to balance oil markets with non-OPEC help. Meanwhile, European Central Bank cut its deposit rate to -0.3 percent from its existing -0.2 percent and extended its asset purchase program to run until the end of March the late American trading hours the Canadian dollar was trading at C$1.3345 to the greenback, or 74.97 U.S. cents, slightly weaker than Wednesday’s close of C$1.3349, or 74.91 U.S. cents. The currency rebounded from a nine-day low on Wednesday after the Bank of Canada used less dovish language in its policy statement than some expected. To the upside, immediate resistance can be seen at 1.3356. To the downside, immediate support level is located at 1.3315 levels.Equities Recap European shares saw their biggest fall in 4 months on Thursday, with a recent rally to 3-month highs sunk by a European Central Bank policy update which fell well short investor on investors expectation on policy easing measures.UK’s benchmark FTSE 100 closed down by 2 percent, the pan-European FTSEurofirst 300 ended the day down by 3.08 percent, Germany’s Dax ended down by 3.3 percent, France’s CAC finished the day down by 3.2 percent.U.S. stocks dropped more than 1 percent on Thursday afternoon as the European Central Bank’s announcements failed to impress investors, while Janet Yellen’s comments suggested the Federal Reserve was on track to raise rates this month.Dow Jones closed down by 1.40 percent, S&P 500 ended down by 1.42 percent, Nasdaq finished the day down by 1.66 percent.Treasuries RecapsYield on Treasuries surged on Thursday, following rising European yields , after the latest round of stimulus from the European central bank disappointed investors and Federal Reserve’s Janet Yellen added more comments suggesting interest rate hike in December.US benchmark 10 year Treasury notes were last down 1-10/32 in price to yield 2.326 percent, up from a yield of 2.178 percent late on Wednesday.The U.S 30 year bond fell 3-6/32 in price to yield 3.068 percent ,up from yield of 2.907 percent late on Wednesday.Commodities RecapCrude prices settled up about 3 percent on Thursday, the eve of an OPEC meeting, as traders who expect no cuts in the group’s output hedged their positions in case of a surprise outcome at a meeting of the world’s largest oil producers.Brent crude settled up $1.35, or 3.2 percent, at $43.84 a barrel, rising more than $2 at the session high. On Wednesday, it had closed down almost $2, coming just about 20 cents from making a new low since March 2009.U.S. West Texas Intermediate (WTI) crude settled up $1.14, or 2.9 percent, at $41.08. WTI’s front-month January futures CLF6 hit a contract low of $39.84 on Wednesday.Gold bounced from near six-year lows on Thursday in line with a sharp rebound in the euro, rising 1 percent after the European Central Bank (ECB) announced the minimum cut in its deposit rate that investors had been expecting.Spot gold was up 1.1 percent at $1,064.71 per ounce at 3:22 p.m. EST (2022 GMT), after falling to its lowest since February 2010 at $1,045.85 an ounce. U.S. gold futures for February delivery settled up 0.7 percent at $1,061.20.
The material has been provided by InstaForex Company – www.instaforex.com