Market Review - 20/11/2015 18:31GMT
Euro falls against the greenabck on Friday after dovish comments from ECB's President Mario Draghi
The single currency weakened against the greenback on Friday amid growing expectations for further stimulus measures by the European Central Bank as ECB President Mario Draghi reiterated that the central bank will do what is necessary to ensure that inflation returns rapidly toward the goal of just under 2%.
During the day, although euro moved sideways in Asia after retreating from previous session high of 1.0763 to 1.0710, price came under renewed selling pressure and fell from 1.0728 to 1.0664 in European morning after ECB's President Mario Draghi's 'dovish' comments. Later, despite a recovery to 1.0708 in New York morning, renewed selling interest knocked price down to a fresh session low at 1.0641 before stabilising.
ECB President Draghi said in a speech in Frankfurt on Friday, 'ECB monetary policy measures have clearly worked; growth momentum remains weak and inflation remains well below our objective of below but close to 2 percent; we cannot say with confidence that the process of economic repair in the euro area is complete; at the December governing council meeting we will thoroughly assess the strength and persistence of the factors that are slowing the return of inflation towards 2 percent; if we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate; if we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible; we consider the asset purchase programme to be a powerful and flexible instrument; it can be adjusted in terms of size, composition or duration to achieve a more expansionary stance; the level of the deposit facility rate can also empower the transmission of app; consider the app to be a powerful and flexible instrument; in making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time.'
later, ECB's policymaker Jens Weidmann said, 'sees no reason to talk down economic outlook or paint gloomy picture; forecasts are not far off the mark; monetary policy measures already taken need time to feed through to economy; the longer we stay with ultra-loose monetary policy, the more the risks; the sharp fall in energy prices is what is mainly driving the low rates; decline in oil prices is more of an economic stimulus for the euro area than a harbinger of deflation.'
Versus the Japanese yen, U.S. dollar spent a lackluster day on Friday as focus was on other major currencies. The usd/jpy pair gained briefly to 122.05 in Asian morning from previous session low of 122.62 and retreated to 122.74, then marginally lower to 122.73 in New York morning before continuing moving sideways for rest of the day.
Elsewhere, the British pound weakened versus the greenback in tandem with euro on Friday. Although cable edged lower to 1.5263 in European morning after staging a bounce from 1.5270 to 1.5299 in Asia, cross-buying in sterling versus euro lifted price to 1.5310 but only to fall to a fresh session low of 1.5186 in New York afternoon.
In other news, Federal Reserve Bank of New York President William Dudley said 'expects U.S. economy to do "ok" in 2016, 2017; rest of the world is not that strong, has made U.S. less competitive; hope that reasonably soon will be reasonably confident that inflation will rebound to 2 pct target; expects to soon raise interest rates; China slowdown is "manageable," but has "shocked" some commodity-producing emerging economies; difficult to predict economic effects of France attacks, situation in middle east; in general, Americans do not save enough for retirement; proposed U.S. law for rules-based approach “a very bad idea” that impinges on policy independence; “very good chance” U.S. will return to 2 pct target, avoid deflationary cycle; 'full employment' now a bit lower than 15 years ago due mostly to demographics; raising U.S. minimum wage to $15/hour would have offsetting effects; suggests rate should rise with median wages; modest U.S. rate hike would have tiny consequences for China; “very logical” to expect inflation, employment conditions satisfied soon allowing rate hike.'
Federal Reserve Bank of St. Louis President Bullard said 'pace of monetary policy tightening should be data-dependent and U.S. central bank must be willing to change course based on that; Fed will return to an era where there is a bit more uncertainty on what will happen with interest rates at each policy meeting; Fed has been dealing with China's lack of transparency on its economy for years, does not see more risks than in the past; expects U.S. real consumption growth to be “fairly strong” in the fourth quarter, sees it as a bright spot in the economy.'
Data to be released:
Japan manufacturing PMI. France mfg PMI, Service PMI, Germany Mfg PMI, Service PMI, EU Mfg PMI, Service PMI, U.S. national activity index, Mfg PMI and existing home sales on Monday.
Germany GDP, business climate, current conditions, expectation, France business climate, Swiss non-farm payroll, U.K. distributive trades, Italy wage inflation, trade balance, U.S. PCE prices, GDP, Redbook, caseshiller, consumer confidence, comp index,mfg shipments and services index on Tuesday.
Australia's construction work done, Swiss consumption indicator, France consumer confidence, Italy industrial order, industrial sales, retail sales, U.S. mortgage rate, mortgage market index, purchase index, mortgage refinance index, initial jobless claims, build permits, consumption, core PCE prices, durable goods orders, PCE prices, personal consumption, personal income, home price, home sales on Wednesday.
New Zealand trade export, trade import, trade balance, Australia's building Capex, plant/machinery Capex, capital expenditure, Swiss industrial orders, EU M3 annual growth, Germany CPI and HICP on Thursday.
Japan jobs/applicants ratio, unemployment rate, household spending, CPI, foreign bond investment, foreign invest JP stock, New Zealand business outlook, U.K. consumer confidence, national house price, Germany import price index, consumer sentiment, France consumer spending, producer prices, Italy business confidence, consumer confidence, EU business climate, inflation expectation, consumer confidence, economic sentiment, industrial sentiment, service sentiment, selling price expectation, Canada producer prices, raw material prices and U.S. U Mich sentiment prelim on Friday.
Euro falls against the greenabck on Friday after dovish comments from ECB's President Mario Draghi
The single currency weakened against the greenback on Friday amid growing expectations for further stimulus measures by the European Central Bank as ECB President Mario Draghi reiterated that the central bank will do what is necessary to ensure that inflation returns rapidly toward the goal of just under 2%.
During the day, although euro moved sideways in Asia after retreating from previous session high of 1.0763 to 1.0710, price came under renewed selling pressure and fell from 1.0728 to 1.0664 in European morning after ECB's President Mario Draghi's 'dovish' comments. Later, despite a recovery to 1.0708 in New York morning, renewed selling interest knocked price down to a fresh session low at 1.0641 before stabilising.
ECB President Draghi said in a speech in Frankfurt on Friday, 'ECB monetary policy measures have clearly worked; growth momentum remains weak and inflation remains well below our objective of below but close to 2 percent; we cannot say with confidence that the process of economic repair in the euro area is complete; at the December governing council meeting we will thoroughly assess the strength and persistence of the factors that are slowing the return of inflation towards 2 percent; if we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate; if we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible; we consider the asset purchase programme to be a powerful and flexible instrument; it can be adjusted in terms of size, composition or duration to achieve a more expansionary stance; the level of the deposit facility rate can also empower the transmission of app; consider the app to be a powerful and flexible instrument; in making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time.'
later, ECB's policymaker Jens Weidmann said, 'sees no reason to talk down economic outlook or paint gloomy picture; forecasts are not far off the mark; monetary policy measures already taken need time to feed through to economy; the longer we stay with ultra-loose monetary policy, the more the risks; the sharp fall in energy prices is what is mainly driving the low rates; decline in oil prices is more of an economic stimulus for the euro area than a harbinger of deflation.'
Versus the Japanese yen, U.S. dollar spent a lackluster day on Friday as focus was on other major currencies. The usd/jpy pair gained briefly to 122.05 in Asian morning from previous session low of 122.62 and retreated to 122.74, then marginally lower to 122.73 in New York morning before continuing moving sideways for rest of the day.
Elsewhere, the British pound weakened versus the greenback in tandem with euro on Friday. Although cable edged lower to 1.5263 in European morning after staging a bounce from 1.5270 to 1.5299 in Asia, cross-buying in sterling versus euro lifted price to 1.5310 but only to fall to a fresh session low of 1.5186 in New York afternoon.
In other news, Federal Reserve Bank of New York President William Dudley said 'expects U.S. economy to do "ok" in 2016, 2017; rest of the world is not that strong, has made U.S. less competitive; hope that reasonably soon will be reasonably confident that inflation will rebound to 2 pct target; expects to soon raise interest rates; China slowdown is "manageable," but has "shocked" some commodity-producing emerging economies; difficult to predict economic effects of France attacks, situation in middle east; in general, Americans do not save enough for retirement; proposed U.S. law for rules-based approach “a very bad idea” that impinges on policy independence; “very good chance” U.S. will return to 2 pct target, avoid deflationary cycle; 'full employment' now a bit lower than 15 years ago due mostly to demographics; raising U.S. minimum wage to $15/hour would have offsetting effects; suggests rate should rise with median wages; modest U.S. rate hike would have tiny consequences for China; “very logical” to expect inflation, employment conditions satisfied soon allowing rate hike.'
Federal Reserve Bank of St. Louis President Bullard said 'pace of monetary policy tightening should be data-dependent and U.S. central bank must be willing to change course based on that; Fed will return to an era where there is a bit more uncertainty on what will happen with interest rates at each policy meeting; Fed has been dealing with China's lack of transparency on its economy for years, does not see more risks than in the past; expects U.S. real consumption growth to be “fairly strong” in the fourth quarter, sees it as a bright spot in the economy.'
Data to be released:
Japan manufacturing PMI. France mfg PMI, Service PMI, Germany Mfg PMI, Service PMI, EU Mfg PMI, Service PMI, U.S. national activity index, Mfg PMI and existing home sales on Monday.
Germany GDP, business climate, current conditions, expectation, France business climate, Swiss non-farm payroll, U.K. distributive trades, Italy wage inflation, trade balance, U.S. PCE prices, GDP, Redbook, caseshiller, consumer confidence, comp index,mfg shipments and services index on Tuesday.
Australia's construction work done, Swiss consumption indicator, France consumer confidence, Italy industrial order, industrial sales, retail sales, U.S. mortgage rate, mortgage market index, purchase index, mortgage refinance index, initial jobless claims, build permits, consumption, core PCE prices, durable goods orders, PCE prices, personal consumption, personal income, home price, home sales on Wednesday.
New Zealand trade export, trade import, trade balance, Australia's building Capex, plant/machinery Capex, capital expenditure, Swiss industrial orders, EU M3 annual growth, Germany CPI and HICP on Thursday.
Japan jobs/applicants ratio, unemployment rate, household spending, CPI, foreign bond investment, foreign invest JP stock, New Zealand business outlook, U.K. consumer confidence, national house price, Germany import price index, consumer sentiment, France consumer spending, producer prices, Italy business confidence, consumer confidence, EU business climate, inflation expectation, consumer confidence, economic sentiment, industrial sentiment, service sentiment, selling price expectation, Canada producer prices, raw material prices and U.S. U Mich sentiment prelim on Friday.
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