Indices Hit New Low, ECB Stands Pat On Interest Rates

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

Become an FT subscriber to read:

Bond markets retreat as ECB stands pat

Leverage our market expertise

Expert insights, analysis and smart data help you cut through the noise to spot trends, risks and opportunities.

Join over 300,000 Finance professionals who already subscribe to the FT.

Draghi Downplays Headline Inflation As ECB Stands Pat

(RTTNews) – European Central Bank Mario Draghi on Thursday defended the ECB’s inaction on interest rates, citing weakness in core inflation.

Policymakers will continue to “look through changes” in headline inflation, as “underlying inflation pressures remain subdued,” Draghi said at a press conference.

“A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term. If the outlook becomes less favorable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration.”

Draghi struck a cautiously optimistic tone in his broader assessment of the Eurozone economy, saying risks to the region’s economic outlook are “less pronounced” but remain “tilted” to the downside.

“Sentiment indicators suggest eurozone recovery may be gaining momentum,” Draghi said. “Our monetary policy has been successful.”

As expected earlier today, the European Central Bank left interest rates and its quantitative easing programme unchanged despite some calls for tightening monetary policy.

The ECB’s monthly bond-buying program will run until at least December, slowing to 60 billion euros ($63 billion) in April from the current 80 billion euros.

The Governing Council left the main refinancing rate at 0%, while the rate on deposits parked overnight at the bank remains at minus 0.4%. The rate on the bank’s marginal lending facility remains at 0.25%.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

Draghi foreshadowed this decision in December by vowing bond purchases will be extended until at least the end of 2020.

Headline inflation has reached the bank’s lone mandate of near 2 percent for the first time since early 2020, but core inflation, stripping out volatile energy prices, remains too weak to remove accommodation.

The ECB’s long-term headline inflation forecast was unchanged. For 2020, they expect consumer prices to rise 1.7%, while their December forecast was 1.3%. However, they project 1.7% inflation in 2020.

Asia Slumps, ECB Stands Pat, US Equities Rebound On Strong Earnings

Asia Falls Hard, Led By Tech

Asian indices fell hard in Thursday trading following a massive rout in the US. The Japanese Nikkei led with a loss of 3.72% and outpaced most other major indices in the region. The Nikkei created a large price gap at the open and fell from there, creating a large red candle and setting a new 9-month low. The is bearish and gaining momentum although price action is now approaching a key support level near 21,000.

The Australian ASX posted the second largest decline during the Asian session with a loss near 2.80%. The ASX was led by tech, but bloodshed was not limited to one sector. The energy, financial, and mining sectors all saw substantial losses with shares of Rio Tinto and BHP falling roughly 3.0%. Chinese indices were not immune to the selloff but fared much better than either the Nikkei or ASX. The Hong Kong Heng Seng led Chinese markets with a loss of -1.0%, the mainland Shang Hai index posted a gain of 0.02%.

The ECB Holds Rates Unchanged

In Europe attention was focused on earnings and the ECB. The ECB held their October policy meeting over the past two days and released their statement this morning. The bank decided to hold rates unchanged which was expected; the bank also maintained its outlook for tightening. The ECB says they are on track, barring unexpected data, to end their bond purchase program in December and to begin policy tightening mid to late 2020.

EU markets were mostly flat and mixed at midday. The UK FTSE was the only index to hug the flatline, trading in a tight range over and under 0.00%, while the DAX and CAC were both able to post gains. The CAC led advancing markets with a gain near 1.0% followed by a distant 0.35% for the DAX. Markets in the region were buoyed by earnings more than anything else. Automakers were strong performers as their results reveal dominance over US car makers like Ford (F) who reported sales decline for the region.

US Futures Point To Rebound, Earnings In Focus

In the US futures trading indicated a strong open. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite were all indicated to post a gain of near 1% led by tech. The NASDAQ was indicated to open with a gain near 1.5% as strong earnings from Microsoft (MSFT), VISA (V), and Tesla (TSLA) all blew past expectations for revenue and earnings growth.

Regarding earnings and earnings season; today is the single busiest day of the season with 66 S&P 500 companies reporting. Reports from Amazon, Google, Intel, Pricesmart, Mattel, and Chipotle Mexican Grill are all due after the bell. Based on reports so far there is a high likelihood this batch will produce better than expected results with a few outlying misses. What will matter to traders is the impact of tariffs and trade war on earnings and how they will affect the outlook for earnings growth over the next five quarters.

EURUSD Nudges Lower After ECB Stands Pat: Press Conference Ahead

EURUSD Talking Points:

  • Monetary policy levers left untouched.
  • Will Draghi give the market any clues at the press conference.

T he DailyFX Q3 EUR Forecast is available to download.

ECB to Reduce Asset Purchases

The latest ECB monetary policy announcement produced no surprises as the central bank left all settings unchanged. The ECB reiterated that asset purchases would halve to EUR15 billion in October from a current rate of EUR30 billion and that interest rates would be kept on hold ‘through the summer of 2020’.

EURUSD remained little changed post announcement and investors will now wait to see if President Draghi gives any clues about Q2 GDP growth – a slight downgrade is expected – or if there is a chance that asset purchases may continue next year.

EURUSD currently trades around 1.16150 and sits in the middle of the 20- and 50-day moving average cloud.

EURUSD One Hour Price Chart (September 5 -13, 2020)

IG Client Sentiment Data show that retail investors are 44.8% net-long EURUSD but recent changes suggest the pair may soon move lower.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide .

— Written by Nick Cawley, Analyst

To contact Nick, email him at [email protected]

Follow Nick on Twitter @nickcawley1

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Sign-up Bonus!

  • Binomo
    Binomo

    Trustful Broker!

Like this post? Please share to your friends:
Binary Options Wiki
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: