Ipek Ozkardeskaya
Swissquote Bank Ltd
The euro declined as the European Central Bank (ECB) refrained from commenting on the future of the Quantitative Easing (QE) programme, due to end on March 2017, leading investors to think that the bank will not end its asset purchases in an abrupt way.
ECB President Mario Draghi said the Committee had not discussed regarding the end of the QE, at his press conference post the ECB meeting, triggering discussions on potential ‘QE engineering’ to allow the viability of the programme and to maintain the monetary conditions loose in the Eurozone.
The EURUSD declined below the 1.0900 handle. The third weekly loss in the EURUSD, hints at stronger downside potential for a mid-term decline towards the 1.0850/1.0800 area. The rising selling pressure in the euro should strengthen short-term offers at 0.9000 in the euro-pound.
The DAX is heading towards the 10800 resistance on the back of dovish ECB expectations, with a possible exhaustion of the short-term gains at this level, before a renewed attempt towards the 11000 level.
The yen and the pound kept quiet, and traded in a tight range close to their respective 50, 100 and 200-hour moving averages.
The FTSE 100 opened mixed and is hesitating at the 7000p level. News that British American Tobacco (+3.50%) offered to buy Reynolds American, aiming leadership in the US market adding Newport, Kent and Pall Mall to its product portfolio, triggered a rally in the sector, also sending Imperial Brands 2.37% higher in London. Together, BAT and IMB added 260 points to the FTSE 100.
Energy stocks (-0.35%) declined as WTI failed to clear offers at $52 for the second time in a week, suggesting a minor correction to $50/$49 zone.
The US dollar remained well bid against all of its G10 counterparts in Asia, except the Aussie. The AUDUSD gained 0.25%, suggesting a will for recovery to 0.7680/0.7730 after having bumped into a decent profit taking at Thursday’s session.
Canada has a crowded economic calendar for the day. The retail sales and inflation data should determine whether or not the USDCAD could stretch up to 1.3300 before the weekly closing bell.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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