As we head into the second day of this week’s critical EU summit, the markets are somewhat underwhelmed by the lack of progress revealed thus far, and EURUSD continues to stay under pressure. A key point of contention yesterday was whether the ESM should be given a banking license; a measure which might have spurred risk appetite if it were agreed – but it appears that Germany is intent on blocking the proposal. Further marathon discussions are expected today as European leaders push closer towards a fiscal union, with a statement of their agreements due to be published after the conclusion of the talks.
In yesterday’s session we had two major central bank meetings during the day; the BoE was pretty much a non-event as rates were kept on hold at 0.50%, but later on the ECB announced that it was cutting rates by 25bp to 1.00%. In addition to the headline cut in interest rates, ECB President Draghi disclosed that the central bank would also be conducting fresh long-term refinancing operations in order to help the strained banking sector. Initially, the FX market viewed these policy decisions as positive for Eurozone growth and stability, pushing EURUSD to a high of 1.3459. However, as the press conference wore on, pessimism and uncertainty quickly returned to the fore and the pair slid all the way back below 1.3300.
Overnight, the mood has stayed pretty downbeat with equity indices across the Asia region posting losses on the day. The Nikkei is -1.5%, Hang Seng trading -1.9%, and Shanghai Composite -0.6% - in spite of Japanese Q3 GDP coming out at a better than expected 5.6% annualized (compared to 5.2% expected).
Coming up in today’s session we have Sweden’s October industrial production figures due and Norway’s latest CPI figures; followed up by UK PPI, the US trade balance, and finally, December’s U.Mich consumer confidence survey.
By
In yesterday’s session we had two major central bank meetings during the day; the BoE was pretty much a non-event as rates were kept on hold at 0.50%, but later on the ECB announced that it was cutting rates by 25bp to 1.00%. In addition to the headline cut in interest rates, ECB President Draghi disclosed that the central bank would also be conducting fresh long-term refinancing operations in order to help the strained banking sector. Initially, the FX market viewed these policy decisions as positive for Eurozone growth and stability, pushing EURUSD to a high of 1.3459. However, as the press conference wore on, pessimism and uncertainty quickly returned to the fore and the pair slid all the way back below 1.3300.
Overnight, the mood has stayed pretty downbeat with equity indices across the Asia region posting losses on the day. The Nikkei is -1.5%, Hang Seng trading -1.9%, and Shanghai Composite -0.6% - in spite of Japanese Q3 GDP coming out at a better than expected 5.6% annualized (compared to 5.2% expected).
Coming up in today’s session we have Sweden’s October industrial production figures due and Norway’s latest CPI figures; followed up by UK PPI, the US trade balance, and finally, December’s U.Mich consumer confidence survey.
By
M.Zohaib Gadit
Forex Trading Consultant
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