ECB Increases QE And Cuts Rates

Today’s Economic events

Japan PPI y/y -3.40% vs. -3.40%

Australia MI inflation expectations 3.40% vs. 3.60% previously

China CPI y/y 2.30% vs. 1.80%; PPI y/y -4.90% vs. -4.90%

Germany trade balance 18.9bn vs. 19.2bn

Italy quarterly unemployment rate 11.50% vs. 11.50%

ECB cuts refi rates to 0% from 0.05%

ECB cuts deposit rate to -0.40% from -0.30%

ECB cuts marginal lending rates to 0.25% from 0.30%

ECB increases QE from €60 billion to €80 billion

US weekly jobless claims 259k vs. 275k

Canada HPI m/m 0.10% vs. 0.20%

Coming up

BoC Governor Poloz speech

Central bank meetings were the focus as back to back BoC and RBNZ meetings kept the markets volatile. While the Bank of Canada left rates steady without any references to the Canadian Dollar’s exchange rates, the RBNZ surprised with a 25bps rate cut, bringing the OCR rate from 2.50% to 2.0%. RBNZ’s statement was strongly dovish noting further rate cuts would be warranted. The move took the Kiwi by surprise as NZDUSD fell sharply on the news. The Kiwi was briefly trading near a five-day low in early Asian session today near $0.66 but managed to push higher up 0.11% for the day.

Image via ECB European Central Bank / Flickr

The Australian dollar remained muted as the AUDUSD is down -0.16% for the day with prices trading flat for the most part. The Yen was weaker since yesterday’s trading as USDJPY is now up 0.90% for the day, trading at 114.3, following a sharp rally after touching lows of 112.35 in yesterday’s session. The weaker Yen saw the Asian markets closing higher with the Nikkei225 gaining 1.20% for the day. China’s Shanghai Composite was, however, weaker down -2.03%. Data from China today saw the inflation numbers rebounding strongly, rising 2.30% to the expected 1.80% increase. PPI was also moderate, falling -4.90% as expected. The better than expected data continued to help the Yen ease back across the board.

In Europe, the ECB’s meeting was the focus of the day as the EURUSD started moving sideways ahead of the ECB’s monetary policy statement. Broadly beating expectations, the ECB cuts the main interest rates to 0.0% from 0.05% while the deposit rates were cut by 10bps to -0.40% and a modest 5bps cut to the marginal lending rates. scaling up the bond purchases to €80 billion and including cBesides the rate cut, the ECB also increased its QE purchases by an additional €20 billion,orporate bonds as well. The Euro fell on the news, down -1.31% for the day but was seen holding above the 1.085 – 1.0825 support level. ECB president Mario Draghi is currently holding the press conference.