Oil Prices Spikes High
The ECB Fails To Deliver as Oil Spikes on an Impressive Inventories Data
ECB decided today to leave all its monetary policy parameters unchanged, including the end date of the QE program. This means that the main rate is still at 0%, deposit rate is -0.40% and marginal lending facility is 0.25%. At the press conference Mario Draghi said that the board hadn’t discussed at all extension of asset purchase programme and under-scored that there were no additional stimulus needed for time being. This pushed most of European equity markets significantly lower but at the end of the day DAX erased part of its losses.
As far as currencies were concerned, the US dollar made an impressive turnaround and it ends the day significantly strengthened. The rising US yields helped the Buck to reverse its losses. The USD has gained over 0.8% vs NZD and JPY but the EURUSD is traded about 0.1% higher.
The price of oil has rallied strongly in the past hour after the latest DOE inventory release showed a drop in US stock piles of 14.5 million barrels in the past week. The decline is the largest in 17 years and the second biggest of all time and has seen Brent Oil (+3.8%) surge higher and back near the $50 handle once more.
August was the third month of exports accelerating in China. It was also the month of a big spike in imports, in fact the biggest since China reports the data also in CNY terms (Jan 2014). The turnover (linked to overall global economic activity) is more important for the markets than the trade balance, so the data should be read as positive. Monthly readings are volatile but these figures raise hopes that the Chinese growth stabilizes instead of breaking further. The data supported the local G10 currencies.
Looking ahead there’s inflation data out from China at 02:30 overnight before UK goods trade balance figures at 09:30 tomorrow morning. Throughout the day there’s Euro-group meetings which could throw up some sort of surprise for the market. Canadian employment data at 13:30 rounds off the week.
News From The Bank Of Japan
During session in Asia the meeting was held between Bank of Japan Governor Kuroda and Japanese PM Abe. There was Discussed the domestic and overseas economic developments. Kuroda on the press conference after the meeting underscored that Bank of Japan comprehensive review with the government.
From more interesting comments, BoJ Governor said that he hadn’t discussed buying foreign bonds with Abe and he hadn’t got any special instructions from the government. On September 21st there is scheduled BoJ meeting. Market expects more easing but the bank’s members seem to be divided.
The meeting was part of regular meetings with PM. In the meantime, JPY is the strongest currency amid G10 gaining over 0.3% vs USD. The pair trimmed increases from yesterday, when USD was supported by rising US yields. USDJPY rebounded off the resistance at 102.60 and now the closest support is located at 101.35.
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