Analysts at Westpac noted that yesterday's Bloomberg story citing anonymous European officials turned out to be accurate.
"Four ECB members, notably chief economist Peter Praet in a published speech, stated that ending their asset purchase program (purchases of Eurozone bonds with newly created money) will be discussed at their 14th June meeting. Political turbulence in Italy and Spain and the slowdown in Eurozone growth appear not to have caused major concern at the ECB.
This caused a sharp response in European markets. EUR/USD rose from 1.1720 to just short of 1.1800. The yields on bonds that are currently benefiting from ECB buying rose sharply, including +10bp in France and the Netherlands, +14bp in Italy (10 year bonds). This caused spillover to the likes of the UK, where the 10 year gilt yield rose 9bp."
"The US 10yr treasury yield rose from 2.93% to 2.98%, which was arguably consistent with the strong rally in US equities. The S&P 500 closed on its highs, up 0.9%, the Dow +346pts and the Nasdaq +0.7% to another record high. US 2yr yields rose from 2.49% to 2.52%. Fed fund futures continued to predict a rate hike next week and another by year end, but only about 20% chance of 2 hikes in H2 2018.
Higher yields and improved risk appetite helped USD/JPY as usual, up 0.4% on the day to 110.20. AUD was strongest in the G10 over the day, ahead of EUR. AUD/USD was 0.7635 before the GDP data and extended in London trade to 0.7677 – a one-month high. NZD/USD reached a one-month high at 0.7060 in the Sydney afternoon, but then slipped to 0.7030. AUD/NZD rose 0.5% to 1.0900.
GBP and CAD were net little changed on the day, though CAD was choppy on volatile oil prices. Copper prices posted healthy gains and spot iron ore also rose, supporting the AUD mood."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.