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.



 1.0590-1.0505-1.0430 | Resistance 1.0825-1.0990-1.1155



120.60-119.50-118.65 | Resistance 122.45-123.70-124.15



1.5000-1.4950-1.4815 | Resistance 1.5250-1.5345-1.5460

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