Saturday October 24, 2015 - 11:29:51 GMT
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Dovish ECB Provides Support To Global Financial Markets
John M. Bland
ECB President Draghi More Dovish Than Expected
The ECB took center-stage in the latest week with its regular policy board meeting and press conference. Traders reacted strongly to apparent guidance that the central bank is considering easing at its next meeting in December. The December meeting is key because that is when the central bank will be getting its next update to its long-term economic forecasts. It would be very unusual for a central bank chief to hint at a policy change if the decision to change rates had not already been made. The only aspect of his comments that was unsettling was his vagueness on what steps the ECB might take. We were all left wondering what tools he has left at his disposal with key interest rates already at or below zero.
Forex Market Developments
After a quiet first half to the week, markets reacted strongly to the Draghi comments on Thursday. Few had been expecting a tone as dovish as we saw after that meeting. The ECB statements not only impacted European markets, but drove U.S. share markets higher as well because the higher USD eases the pressure on the Fed to raise rates in the immediate future. There is chatter that the Bank of Japan will take a dovish policy stance at the end of this week as well.
The upcoming week is a relatively active period for major economic data.
-- Monday October 26, US- IFO Survey, New Homes Sales
-- Tuesday October 27, GB- GDP US- Durable Goods Orders, flash Service PMI, Conference Board Consumer Confidence
-- Wednesday October 28, US- Advance Trade, Weekly Crude, FOMC policy Decision
-- Thursday October 29, NZ- RBNZ Policy Decision, AU- CPI, DE- Unemployment, US- Weekly Jobless, GDP, Pending Homes Sales
-- Friday October 30, JP-Bank of Japan Decision, EZ- flash HICP, CA- GDP, US- Personal Income, PCE Deflator, Chicago PMI, Final University of Michigan Survey
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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