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June

Euro whacked by European Central Bank Quantitative Easing wind down

Published: Friday 15 June 2018

  • Euro whacked by European Central Bank Quantitative Easing wind down
  • USD stronger on retail data
​​By David Johnson

Shock central bank announcement for Europe
 
Thursday saw a central banker do something unexpected. Cue trumpets and a host of choirs rejoicing. Yup, Mario Draghi; head honcho at the European Central Bank (ECB), announced that they would halve their asset purchases in September and halt them completely at the end of the year. It’s a hell of a way to celebrate the start of the football World Cup.
 
The ECB also downgraded their economic growth forecasts for this year and 2020 but increased their inflation forecasts at the same time. No discussion was had over raising interest rates and they should stay on hold until at least the end of the summer – and probably well beyond that.  The Euro weakened against everything in the afternoon.  The GBPEUR rate was up a cent on the day and the EURUSD rate likewise.
 
Elsewhere in Europe, Italian voters’ support for the Euro has dropped to 61%. That’s the lowest in the EU, although I was in Greece last week and didn’t hear a good word about the EU while I was there.
 
Strong US data boosts US Dollar
 
US data was strong; Retail Sales were up an impressive 0.8% on the month after last month’s revised 0.4% rise.  We also saw a drop in the weekly Jobless Claims. The US Dollar had a strong afternoon session.
 
Sunnier times for Sterling
 
Sterling had a much better day after Retail Sales beat expectations in May and the April figure was also upwardly revised. Warmer weather and a royal wedding clearly had an impact, but the data is improving more generally and many are suggesting the sharp downturn we saw at the turn of the year may have been a blip.
 
Trade war concerns more likely to move markets than data
 
Today’s diary includes a smattering of inflation data from EU States and the Michigan Consumer Sentiment Index. None of this is likely to be market moving. Rhetoric about the global trade wars is more likely to get pulses racing in trading rooms, but anyone with an interest in the Canadian Dollar should be watching the manufacturing sales data. The forecasts are on the downside of last month’s data, so Canadian Dollar weakness is a possibility.
 
And then we are into the first weekend of the Football World Cup. That, for England, is largely like the UK in the Eurovision song contest. We have to attend, but no one expects us to win. If you want to watch something where England stands a chance of winning, watch the Under 20s Rugby World Cup. We take on France on Sunday and it looks set to be a scorcher.

#FridayFeeling – time for the World Cup
 
And then we are into the first weekend of the Football World Cup. That, for England, is largely like the UK in the Eurovision song contest. We have to attend, but no one expects us to win. If you want to watch something where England stands a chance of winning, watch the Under 20s Rugby World Cup. We take on France on Sunday and it looks set to be a scorcher.
English is tricky 
  • The fisherman caught a bass and placed it at the base of the bass drum
  • A seamstress and a sewer fell into an open sewer
  • After a number of injections my jaw became number
  • How can I intimate this to my most intimate friend?
  • I did not object to the object
  • I had to subject the subject to a series of tests
  • He thought it was time to present the birthday present
  • The bandage was wound around the wound
  • The buck does funny things when the does are around
  • The dump was so full it had to refuse more refuse
  • The farm was used to produce produce
  • The insurance was invalid for the poor invalid
  • The soldier in the desert decided to desert before his dessert was served
  • The wind was too strong to wind the sail
  • There was a row amongst the oarsmen about who should row
  • They were too close to the door to close it
  • He was behind with the planting, so the farmer taught his sow to sew sacks so they could sow the seeds
  • Upon seeing the tear in her dress, the bride shed a tear
  • We must polish the Polish furniture

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 10:00 EU: Final Consumer Price Index 1.9% 1.9%
EUR 10:00 EU: Core Final Consumer Price Index 1.1% 1.1%
EUR 10:00 EU: Trade Balance 21.2b 20.2b
CAD 13:30 Canada: Foreign Securities Purchases 6.15b 5.49b
CAD 13:30 Canada: Manufacturing Sales 1.4% 0.6%
CAD 13:30 Canada: Empire State Manufacturing Index 20.1 19.1
USD 14:15 US: Capacity Utilization Rate 78.0% 78.1%
USD 14:15 US: Industrial Production 0.7% 0.2%

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