Diverse Central Bank policy in full swing

<p>The euro is trading at yet another fresh 12-year low as policy diversification from Europe to the US increases. ECB president Mario Draghi has just […]</p>

The euro is trading at yet another fresh 12-year low as policy diversification from Europe to the US increases. ECB president Mario Draghi has just held a press conference outlining the ECB’s launch of its 60billion monthly securities purchasing programme, which has seen European government bond yields trade at historic lows and has so far failed to buoy European risk assets. There was nothing that we hadn’t already learnt from the ECB president this morning that wasn’t revealed in the press conference last week, although I did note Mario’s comments that QE does stop the risk of contagion across Europe and that its implementation significantly lowered the second round risk from oil prices.

The Wall Street Journal ran an article by Fed watcher Jon Hilsenrath yesterday, suggesting that the FOMC are looking to remove the ‘patient’ language at next week’s meeting so that the committee can start discussing a rate increase at its June meeting. Several officials have said they want this option if the economic data continues to outperform between now and then. The market still anticipates that September is the most likely month for US rates to lift off, as the Federal Reserve will be careful not to signal a pre-set course on rates following the mistakes made in 2004-2006 with the ‘measured pace’ language that left them no room to diversify when the data deteriorated.

The market failed to react to the weaker Chinese data overnight that revealed that retail sales had declined to 10.7% from the expected 11.6% for 2015, and industrial production fell year to date to 6.8% from the consensus forecast of 7.7%. We look towards the UK manufacturing and industrial production from the UK today.

 

 

EUR/USD
Supports
 1.0590-1.0505-1.0430 | Resistance 1.0825-1.0990-1.1155

 

 

USD/JPY
Supports  
120.60-119.50-118.65 | Resistance 122.45-123.70-124.15

 

 

GBP/USD
Supports 
1.5000-1.4950-1.4815 | Resistance 1.5250-1.5345-1.5460

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.