News

Euro Soars despite Stimulus Measures

EUR

The European Central Bank announced several monetary policy easing measures following its meeting yesterday, aiming to support the economic activity in the region. The bank lowered the deposit facility rate by 10 basis points to -0.50% from -0.40% while keeping the main refinancing rate and marginal lending facility rate unchanged. Furthermore, the bank will buy 20 billion Euros worth of bonds every month starting November 1st. The ECB downgraded the inflation forecasts for 2019 through 2021, and the growth figures for 2019 and 2020. The European Central Bank president Mario Draghi declared that the chances of a recession have gone up, and they are ready to adjust the monetary policy as appropriate. The single currency dropped to a low of $1.0927, but recovered losses and edged higher to $1.1109 ahead of the European Trading session supported by dollar weakness as investors were seen fleeing US bonds.

USD

The dollar index which measures the greenback against a basket of major currencies faltered at a ten-day high of 99.10 and tumbled to 98.04. The ECB will resume asset purchases, buying 20 billion Euros worth of bonds every month which would make the European bonds more favorable than US bonds to investors. As a result, the price of US bonds drifted lower. The solid economic data continue to show that the US economy is in better shape than rivals, and the Fed could be far away from printing money again.

Equities

The Dow Jones Industrial Average futures closed higher at 27198 yesterday posting a seven-day winning streak. The latest developments over trade between China and the United States and ECB stimulus enhanced investors' risk appetite. The S&P500 futures edged higher to 3017, and Nasdaq futures rallied to 7982.

Metals

Gold prices reacted positively to the monetary policy easing measures of the European Central Bank, where the price of a gold ounce rose to $1524. However, the improved risk sentiment supported investors in jumping into riskier assets and flee safety. As a result, gold surrendered gains and tumbled to $1495. The price of a silver ounce dropped to $17.96 from $18.45, while palladium logged a record high of $1622.

Oil

Oil prices recovered slightly on ECB stimulus and hopes on US-China trade talks. Investors were concerned over the global economic outlook, especially with the ongoing trade clashes between the world's largest economies. Moreover, the sluggish manufacturing figures around the world suggested a drop in global demand for oil. However, the scheduled trade talks and the announcement of several monetary policy easing measures by the ECB yesterday eased investors' woes. The West Texas Intermediate crude futures rose to $55.36, and Brent futures advanced to $60.56.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

Core Retail Sales (MoM) (Aug)

0.1%

1.0%

12:30

US

Retail Sales (MoM) (Aug)

0.2%

0.7%

14:00

US

Business Inventories (MoM) (Jul)

0.3%

0.0%

14:00

US

 Michigan Consumer Sentiment (Sep)

90.9

89.8

17:00

US

U.S. Baker Hughes Oil Rig Count

 

738

 


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