Market movers today

Markets will continue to digest the repercussion of yesterday's eventful ECB meeting. Also focus remains on any headlines about a possible interim trade deal between the US and China.

EU Finance ministers will meet in Helsinki today. Discussions on the "euro area budgetary instrument for convergence and competitiveness" as well as policy priorities from the new Italian finance minister will both be on the agenda.

In the US retail sales figures for August are due out. Last month, the retail sales control group came out much stronger than we expected, indicating strong consumption growth. In light of the recession in the manufacturing sector, we intend to keep an eye on whether private consumption growth can keep up the pace. While a negative surprise is long overdue given the volatility of the time series, fundamentals still look strong and we expect an increase of 0.4% m/m.

In Sweden we get revisions of second quarter GDP today.

 

Selected market news

The ECB cut the deposit rate by 10bp to -50bp, leaving the MRO and MLF unchanged, while also linking it to the inflation outlook. In addition, the ECB restarted QE by EUR20bn/month with an open end, which was a strong commitment, but a very vocal call from Draghi indicated a need for fiscal policies to take the stage now. Given the much clouded environment and need to gauge the market impact of the tiered deposit system on money market rates, we do not expect the ECB to change policy rates in our horizon at the current juncture. However, if further monetary easing is needed, it would come via a rate cut and not further QE.

The short-end of the EUR money market curve suffered markedly on the publication of the details of the tiered deposit system, which potentially could mitigate part of the effect of the rate cut, while the longer end of the yield curve is broadly unchanged on the day. EUR/USD initially sold off on the open-ended QE announcement, but bounced back after details of the tiered deposit system was announced.

Following the rate cut from ECB, Danmarks Nationalbank announced a 10bp cut in its key policy rate, the rate of interest on certificates of deposit, to minus 0.75%. It left the current account rate and the lending rate unchanged at 0.00% and 0.05%, respectively. Danmarks Nationalbank also kept banks' current account limit unchanged.

In the midst of the ECB meeting, rumours surfaced that US had discussed offering China an interim trade deal that would delay and roll back some tariffs in return for concessions on the issue of intellectual property rights and purchases of agricultural goods. The White House later denied. OPEC+ announced that it will put more pressure on members not complying with output cuts in response to concerns of a growing supply surplus in the oil market. Finally, US Treasury Secretary Mnuchin dismissed the rumour from earlier in the week that US mulls an easing of sanctions on Iran.

Download The Full Daily FX Market Commentary

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD struggling to hold onto 1.10 as USD gains ground

EUR/USD is trading close to 1.10, as the US dollar gradually advances. Two White House advisers expressed contradicting accounts of US-Sino trade talks, causing confusion. Germany refrained from adding fiscal stimulus.

EUR/USD News

GBP/USD trades around 1.25 as EU pours cold water on Brexit hopes

GBP/USD is trading around 1.25, off the two-month highs of 1.2582 as EU officials cast doubts about the seriousness of the new UK proposals on Brexit. 

GBP/USD News

USD/JPY drops to one-week lows on trade war headlines

The USD/JPY fell during the American session following reports that the Montana Farm Bureau said China's delegation has canceled a planned trip to view US agriculture.

USD/JPY News

Top 3 price prediction Bitcoin, Ripple, Ethereum: Ethereum points to the Moon as Bitcoin takes a break

ETH/USD exceeds $220 and is bidding to lead the market. Bitcoin sets a bear trap and recaptures $10,000. XRP stalls between technical levels and fails to consolidate $0.30.

Read more

Gold climbs further beyond $1500 mark, lacks follow-through

Gold edged higher for the second consecutive session on Friday, albeit remained well within a familiar trading range held over the past two weeks or so.

Gold News

Forex Majors

Cryptocurrencies

Signatures