We have been expecting the result of this ECB decision for quite some time now. Many see this announced asset purchasing program as a chance to temporarily allow market participants to have some faith in that the ECB is serious on fighting deflation. The release though subdued the Euro down to a refreshed low below 1.1350 and pushed up the global stock markets. In fact, the Euro hit a 11 year low.
The total amount of the program is no less than 1.1 trillion Euro – 60 billion Euro per month, starting in March and until at least the end of September, 2016. Mr. Draghi emphasises that the program is open-ended like the QE3 of the US and will continue until the inflation level of Eurozone returns to 2%. As aforementioned, this QE was expected but the amount was actually twice as much as any prediction had set out. Traders now are mostly satisfied.
The falling Euro also helped the USD rise against other majors. A breakout just happened as I was writing this report. The Aussie Dollar slumped below its former mouth low of 0.8030 – finishing the over-a-month consolidation. The 0.8000 integer level is being tested and may not support the currency for long. The Australian Dollar still is the strongest currency among other commodity pairs. After NZDUSD broke the bottom of its three-month consolidation and the Bank of Canada just cut its interest rate, the Aussie Dollar won’t be able to defy gravity on its own. The next target may be 0.78 and 0.75.
Gold prices surged to $1304 refreshing recent highs as the newly announced QE provided enough funds for the market. In the weekly chart, we can see a downward trendline connecting the highs of 2013 and 2014. The next target of gold may be this trendline and the price level is around $1325.
Stock markets were in a sea of green. The Shanghai Composite rose 0.59% to 3343. ASX 200 bounced 0.49% to 5420. The Nikkei Stock Average gained 0.28%. In European markets, the UK FTSE was up 1.02%, the German DAX gained 1.32% and the French CAC Index rose 1.52%. The US market closed inspired by QE as well. The S&P 500 closed 1.53% higher to 2063. The Dow gained 1.48% to 17813, and the Nasdaq Composite Index surged 1.78% to 4750.
On the data front, China HSBC Flash Manufacturing PMI will be released at 12:45 pm AEDST. PMIs of Euro area will also be out in this afternoon. UK retail sales will be at 8:30 AEDST and Canada CPI and retail sales will be at midnight.
Recommended Content
Editors’ Picks
EUR/USD fluctuates near 1.0700 after US data
EUR/USD stays in a consolidation phase at around 1.0700 in the American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.