Cliff Notes: Gauging Economic Strength at the Turn of the Year
Key insights from the week that was.
This week saw a number of key data updates globally, most notably consumer sentiment and the labour force survey in Australia and GDP for China. In Washington DC, Joe Biden was also sworn in as the 46th US President.
Beginning with Australian Westpac-MI consumer...
US Dollar Retreats On Stimulus Hopes
The dollar wilts before the stimulus trade
The US dollar index retreated overnight as markets continued to rotate out of US dollars and into global recovery facing commodity and Asian currencies. The dollar index fell 0.40% to 90.04, leaving it squarely in the middle of its 89.00 to 91.00 two-month...
Stocks Retreat, Dollar Edges Up As Virus Concerns Creep In Again
Equity rally loses steam after strong weekly gains amid renewed virus jitters
Talk of Biden tax increases also undermines risk appetite, lifting the dollar
Poor data pull down pound and aussie but euro fares better after ECB stays put
Virus outbreaks, recession fears cap risk rally
The stimulus-led stock market...
Markets Await Important Data To Be Published Today
Markets
The ECB kept policy unchanged yesterday. During an overall cautiously optimistic but not very informative press conference, ECB president Lagarde said the bank's aims is to preserve favourable financing conditions across the euro zone and will adjust policy accordingly. For the first time however, the policy statement formally notes...
ECB On Hold And Hoping To Stay There
As expected, no policy change delivered or signalled.
ECB emphasises mixed signs in current oulook.
Obstacles to early policy changes look immense.
Preserving ‘favourable financing conditions' the key current focus for ECB.
But guidance lacking on what ‘favourable conditions' might mean in practice.
Markets may explore ECB's tolerance...
Ineffective Vaccines A Key Tail Risk For Global Recovery
Market movers today
Today's focus is on preliminary PMIs for the euro area (including Germany and France), the UK and the US. Most PMIs are likely to show that we are still in the middle of a manufacturing boom, while the service sector is struggling due to restrictions. This...
Central Banks Ready and Willing
Stock markets are broadly flat on Thursday as numerous central banks held their first policy meetings of the year and earnings season continued.
So much focus has been on the transition in Washington and Joe Biden's inauguration but today we've had multiple major monetary policy meetings, albeit no action from...
Sunset Market Commentary
Markets
The ECB left key policy parameters unchanged. The deposit rate remains at a negative -0.5%. APP runs at a €20bn pace/month. Net bond buying under PEPP will continue until March 2022 while maturing securities will be rolled-over at least until end 2023. The ECB has repeatedly said they could...
ECB Gets Slightly More Hawkish, Revealing that it might Not Use All of PEPP Envelope
The ECB left its powder dry in January. While continuing to warn of the downside risks on the Eurozone and global economy, the central bank delivered a hawkish tweak about operation of the Pandemic Emergency Purchase Program (PEPP). On the monetary policy measures, the central bank left the size...
ECB Recap: EUR/USD Rallies as Lagarde Shrugs off Euro Strength
As my colleague Fiona Cincotta anticipated yesterday, the European Central Bank made no changes to monetary policy, determining that no additional stimulus was warranted (yet) despite another extension to pandemic-related lockdowns on the continent.
The headlines from the decision follow:
ECB Leaves Deposit Rate Unchanged at -0.50%
ECB Affirms Size...
Euro Recovers as ECB Sees Less Pronounced Downside Risk, Dollar Softens after Jobless Claims
Euro recovers mildly in early US session, after ECB said downside risks to the economic outlook are less pronounced. Though, it remains one of the worst performing for the week, together with Dollar, Yen and Swiss Franc. The greenback is clearly still under pressure for now, after worst than...
ECB Lagarde: Risk tilted to the downside but less pronounced
In the post meeting press conference, ECB President Christine Lagarde said "the roll-out of vaccines, which started in late December, allows for greater confidence in the resolution of the health crisis". But it will "take time until widespread immunity is achieved". Thus "further adverse developments related to the pandemic...
(ECB) Introductory Statement to the Press Conference
Christine Lagarde, President of the ECB,
Luis de Guindos, Vice-President of the ECB
Frankfurt am Main, 21 January 2021
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today's meeting of the Governing Council, which was...
ECB press conference live stream
https://www.youtube.com/watch?v=7VMNOqI-cyo
Full introductory statement.
ECB maintains very accommodative monetary policy stance
ECB left the "very accommodative monetary policy stance" unchanged as widely expected. Main refinancing rate was held at 0.00%, marginal lending rate a and deposit rate at 0.25% and -0.50% respectively. Rates will "remain at their present or lower levels until it has seen the inflation outlook robustly converge...
(ECB) Monetary policy decisions
The Governing Council decided to reconfirm its very accommodative monetary policy stance.
First, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. The Governing Council expects the key ECB...
Stocks, Pound Extend Gains And EUR/USD Steady As ECB Eyed
The EUR/USD was steady while the GBP/USD hit a new multi-year high on Thursday morning, as the US dollar fell further with more global indices hitting new record highs with investors remaining hopeful that lockdowns will end hopefully in the not-too-distant future with many developed countries rolling out COVID...
Wall Street At Fresh Record As Biden Sworn In, Euro Up Ahead Of ECB
Hopes of more stimulus and relief over Biden's peaceful transition lift sentiment
US stocks close at new record highs as strong earnings add extra fuel
Dollar skids again, euro bounces off lows ahead ECB decision
Optimism high as Biden enters White House
After four tumultuous years, Trump's presidency came to...
Honeymoon In DC
For all the noise about the Biden USD1.9 trillion stimulus package that we are writing about ad nauseum, and the follow-on remake America spending the new President also wishes to enact, one critical risk remains and is being totally ignored by financial markets everywhere. That is the inclination of...
Keep A Very Close Eye At Sterling
Markets
The British pound unexpectedly took center stage yesterday. EUR/GBP declined sharply at the very start of the European open, temporarily breaking below key support at the 0.886 area. UK December inflation topped expectations but failed to explain the move from a timing-perspective. Moreover, with inflation still well below the...
Equity Markets Celebrate The Inauguration Of Biden
Market movers today
The most important event of the day is the ECB meeting (announcement 13:45 CET, press conference 14:30 CET). That said, we expect it to be a fairly boring one with the ECB taking stock after the big package launched at the last meeting in December. For...
ECB preview; EUR/AUD to break 1.5591 support
ECB meeting is a focus today but it's likely to be non-eventful. Monetary policy should be left unchanged. Following the recalibration in December, ECB would leave the size of the Pandemic Emergency Purchase Program (PEPP) at EUR 1850B and that of the Asset Purchase Program (APP), its traditional QE...
ECB: May Hold Steady with Eyes on the Euro
The European Central Bank (ECB) will conclude its first rate-setting meeting of the year on Thursday at 12:45 GMT and although worsening virus conditions have made a double-dip recession all but certain at the end of 2020, the central bank may decide to stay on the sidelines. The policy...
Sunset Market Commentary
Markets
Sterling grabbed the market spotlights in an otherwise calm trading session. At the onset of European dealings, EUR/GBP hovered around levels seen earlier this week, close to, mostly slightly below 0.89. This initially continued after the release of (marginally) higher than expected UK December inflation (headline rising from 0.3%...
Yellen Sends The Dollar Lower
Yellen’s stimulus testimony weighs on dollar
Janet Yellen testified on Tuesday at her confirmation hearing for US Treasury Secretary. Yellen’s remarks on additional US stimulus, to the tune of USD1.9 trillion, triggered gains for equities but losses for the US dollar.
The US dollar edged lower as Ms Yellen’s “go big...
Deficits Be Damned
The Financial Times reports that Treasury Secretary Nominee Janet Yellen, the Federal Reserve's former head, will state that the US risks a more prolonged recession and long-term scarring if it does not inject more government spending into the economy. The prepared remarks obtained by the FT ahead of Ms...
ECB Preview – Awaiting More Comments of Strong Euro
While ECB would likely leave its monetary policy measures unchanged this week, the market should focus on several issues: members’ view on recent euro strength, discussions on QE tapering and economic impacts of renewed lockdown. Following the recalibration in December, ECB would leave the size of the Pandemic Emergency...
Sunset Market Commentary
Markets
Trading on global markets was mainly order driven and technical in nature. There were no eco data with market moving potential in EMU. In addition, European markets also lacked any guidance from the other side of the Atlantic as US markets are closed in observance of the Martin Luther...
Week Ahead – ECB, BoJ and BoC Meet But All Eyes on US Capitol
The first of the new year’s central bank meetings will get under way next week and it will be a heavy schedule on the data front as well. The European Central Bank, Bank of Japan and Bank of Canada will almost certainly be debating the latest setback to the...
Weekly Focus – Biden Inauguration Next Week amid Fed Repricing
President-Elect Joe Biden is due to be inaugurated on Wednesday. While the event is normally a pure formality, tensions are high in the US, with concerns about another riot. We expect the Biden administration to be more stimuli-friendly near-term, as Biden told us when he presented his economic plan...