ECB Gave Short-Lived Boost to the Euro

Market Reviews

Post ECB recovery of the euro turned out to be short-lived. The single currency is back under selling pressure again. US dollar, Australian dollar and New Zealand dollar are the strongest. Swiss franc and Canadian dollar are the weakest ones for the moment.

ECB left main refinancing rate unchanged at 0.00% as widely expected. Marginal lending rate and deposit rate were held at 0.25% and -0.40% respectively. It also reiterated that interest rates will “remain at their present levels at least through the summer of 2019”. ECB President Mario Draghi said “incoming information, while somewhat weaker than expected, remains overall consistent with an ongoing broad-based expansion of the euro area economy and gradually rising inflation pressures.”

US economic data showed, that initial jobless claims rose 5k to 215k in the week ended October 20, above expectation of 208K. Continuing claims dropped -5k to 1.636m in the week ended October 13, lowest since August 4, 1973. US trade deficit widened to USD -76.0B in September. Headline durable goods orders rose 0.8% September, above expectation of -1.1%. But ex-transport orders rose 0.1%, below expectation of 0.3%. Wholesale inventories rose 0.3% mom in September.

Also released today, German Ifo business climate fell to 102.8 in October, down from 103.7, below expectation of 103.2. Current assessment gauge dropped to 105.9, down from 106.4 and missed expectation of 106.0. Expectations gauge dropped to 99.8, down from 101 and missed consensus of 100.3.

Global stocks showed mixed results. In Europe, FTSE fell by 0.34%, DAX was down 0.08%, CAC gained 0.89%. Earlier in Asia, Nikkei closed sharply lower by 3.72% at 21268.73. Hong Kong HSI lost 1.01% and Singapore Strait Times dropped by 0.63%. But China Shanghai SSE closed 0.02% higher at 2603.80.