Euro Stays Weak After Dovish ECB Statement

Market Reviews

Euro remains soft after yesterday’s ECB rate statement and press conference of Mario Draghi. The ECB left the main refinancing rate is held at 0.00%, marginal lending facility rate at 0.25%, deposit facility rate at -0.40%. The ECB also reiterated that it plans to keep rates at current levels, "at least until the end of the summer of 2019. ECB President Mario Draghi reiterated that the asset purchase target will be lowered to EUR 10B per month after September. The program will end after December.

The Japanese yen stays stable today with help from strength in JGB yields. 10 year JGB yields hit as high as 0.113 and is now hovering at around 0.10. Today’s data showed, that Japan Tokyo CPI rose 0.8% yoy in July, up from prior month’s 0.7% yoy and beat expectation of 0.7% yoy.

The global shares were mixed. DOW rose by 0.44% to 25527.07. NASDAQ fell by 1.01% to close at 7852.18. Japan’s Nikkei rose by 0.33% to 22661.73. Hong Kong HSI dropped by 0.25%, China Shanghai SSE was down -0.16%. Singapore Strait Times fell by 0.21%.

In the latest projections, IMF projected China GDP growth to be at 6.6% in 2018, slow to 6.4% in 2019, 6.3% in 2020, 6.0% in 2021, 5.7% in 2022 and 5.5% in 2023. Current account surplus as to GDP is projected to be at 0.9% in 2019, to close to 0.8% in 2019, at 0.8% in 2020, then slow to 0.7% in 2021, 0.5% in 2022 and 0.4% in 2023.

Taro Aso (Japanese Finance Minister) stated, that he wanted the Group of 20 meetings in Osaka next year to focus on identifying problems in the global economy before they could worsen. "The role the G20 should play next year is to nip crises in the bud before they develop further," Aso said.

Today’s data also showed, that Australia PPI rose 0.3% qoq 1.5% yoy in Q2, slowed from prior 0.5% qoq, 1.7% yoy. French GDP rose 0.2% qoq in Q2, below expectation of 0.3% qoq. US Q2 GDP is the highlight of today. It’s expected to show stellar 4.2% annualized growth.