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April 21, 2016

ECB remain untouched QE volumes, US preliminary labor data shows positive changes.

ECB remain untouched QE volumes, US preliminary labor data shows positive changes.

At the beginning of his speech at the press conference following the ECB meeting the chairman of the European Central Bank said that the regulator plans to keep rates at current or lower levels for a long time.
Draghi mentioned improvement in financial conditions, in spite of the continuing uncertainty in global financial markets.
Mario Draghi repeated his earlier statement that in the coming months inflation will remain negative, but it will rise later in the year.
Short-term Euro jumped to 1.1388 against the dollar after the announcement of the ECB on the improvement of the credit and financial conditions, but later pared down gains.European Central Bank will resume the buy-out of corporate bonds of the euro area in June this year, said the head of the ECB Mario Draghi at a press conference.
Speaking at the press conference after the regulator has kept its key rate at zero, Draghi said that the details of buying corporate bonds will be released later on Thursday.
According to his words, the maturity of corporate bonds, including bonds of insurance companies, can be up to 30 years, monthly volume of purchase will reach 80 billion euros which ECB is going to allocate for the purchase of assets.
The ECB said last month that it would buy bonds from the euro zone that have an investment grade rating.

US dollar fell against major currencies after the release of controversial economic reports in the US that boosted demand for the US currency, while the European Central Bank’s decision to keep rates at the same level had a significant support for the single currency. The pair USD / JPY fell 0.11% to 109.70.
US Department of Labor said the number of initial applications for unemployment benefits for the week ending April 16 fell by 6,000 to a seasonally adjusted 240,000 from 253,000 the previous week. Analysts had expected growth in the number of initial applications for 10,000 to 263,000 last week.

Federal Reserve Bank of Philadelphia said that its manufacturing index this month fell to -1.6 from 12.4 in March. Economists had expected a smaller decline to 8.9. The EUR / USD rose 0.48% to 1.1351, erasing gains later, declining to 1.13 level.
The European Central Bank kept interest rates unchanged at a record low 0.0%, in line with expectations.
The organization also left the same amount of its quantitative easing program by 80 billion euros monthly. The statement also pointed out that “the center of attention at the moment was the realization of additional non-standard measures adopted by the 10 March 2016”.

On Thursday, the UK Office for National Statistics reported that in March, the volume of retail trade decreased by 1.3% compared to expectations of decline of 0.1%. In annual terms, retail sales increased by 2.7%, while expected to grow by 4.4%.
Retail sales excluding cars fell by 1.6%, much more than expected fall of 0.4%.
A separate report showed that net borrowing of the public sector in March increased by 4.2 billion pounds after increasing by 6.49 billion pounds in the previous month. Analysts had expected last month in the public sector borrowing will rise by 5.5 billion pounds.

The Australian dollar rose, AUD / USD pair rose by 0.42% to 0.7827, while the pair NZD / USD stable at 0.6977.
Earlier, the National Bank of Australia said its index of consumer confidence fell in the first quarter to 4 from 5 in the three months from December, the figure was revised from a preliminary assessment  to 4 points. Pair USD / CAD fell 0.10% to 1.2642, holding nine-month low in the previous session of 1.2594.

Commodity currencies were supported as oil prices rose to their highest level since November after the International Energy Agency reported that in 2016 it expects the largest  decline in production in non-OPEC producers for 25 years.
USD index, which shows the relationship of the US dollar against a basket of major currencies, was down 0.36% to 94.21.  The number of Americans who first applied for unemployment benefits fell by 6 thousand last week – from 253 thousand to 247 thousand, according to the US Ministry of Labor report.  The index fell to the lowest since 1973.

Analysts surveyed by Bloomberg, expected an increase in the number of applications for 8 thousand to 265 thousand.
Such a low rate of applications for benefits suggests that US companies are still optimistic about the outlook for demand in the country. Economists expect that the strong labor market will lead to higher consumer spending and support the US economy after a weak first quarter.

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