Friday 4th December: European Open Briefing

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Friday 4th December: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei down 2.25 %, Shanghai Composite fell 1.20 %, Hang Seng declined 1.25 %, ASX 200 lost 1.70 %
  • Commodities: Gold at $1060 (-0.04 %), Silver at $14.07 (-0.05 %), Crude Oil at $41.30 (+0.60 %), Brent Oil at $44.10 (+0.20 %)
  • Rates: US 10 year yield at 2.29, UK 10 year yield at 1.90, German 10 year yield at 0.70

News & Data:

  • Australia Retail Sales (MoM) Oct: 0.5% (exp 0.4% prev 0.4%)
  • New Zealand ANZ Commodity Price Index (MoM) Nov: -5.6% (prev rev 7.1%)
  • PBoC Fixes Yuan Reference Rate At 6.3851 (prev 6.3982)
  • Global stocks hit, euro shines after ECB wrong-foots traders – RTRS
  • S&P posts biggest drop since September as ECB disappoints – RTRS
  • Crude climbs ahead of OPEC meet as dollar slips back – RTRS

ECB Meeting Summary:

  • ECB: Deposit Facility Rate Cut By 10Bps To -0.30% From -0.20%
  • ECB: Leaves Main Refi Rate Unchanged At 0.05%, Marginal Lending Rate Left Unchanged At 0.30%
  • Draghi: QE Extended Until March 2017 Or Beyond
  • Draghi: To Reinvest Principle Payments For As Long As Needed
  • Draghi: Will Broaden QE Programme To Include Regional Debt
  • Draghi: Slack, External Woes Reflected By Persistence Of Low Inflation
  • Draghi: 2015 Growth Seen At 1.5% From 1.4%
  • Draghi: 2015 Inflation Forecast Unchanged At 0.1%
  • Draghi: 2016 Inflation Seen At 1% From 1.1%
  • ECB's Weidmann was unhappy with ECB decision today; decision was taken without the backing of 5 officials – BILD

Markets Update:

The Euro rallied sharply yesterday, after the ECB cut the deposit rate by only 10 bps, while many were expecting a 15-20 bps cut. Further, the central bank did not increase the amount of bonds it buys through its QE programme and extended it for only six months. The market was expecting both an increase in size of asset purchases as well as an extension of one year. This led to a large short squeeze in all EUR pairs. EUR/USD rallied from a low of 1.0518 to a high of 1.0980. In Asia, the pair fell slightly as short-term specs were booking profits and reached a low of 1.09. There it found decent support and made it back to 1.0940.

The focus is now on today's US employment data release at 13:30 GMT. The market is expecting a rise in Nonfarm Payrolls of 200k, while the unemployment rate is expected to remain steady at 5.0 %.

Upcoming Events:

  • 07:00 GMT – German Factory Orders
  • 08:15 GMT – Swiss CPI
  • 10:00 GMT – Euro Zone GDP
  • 13:30 GMT – US NFP
  • 13:30 GMT – US Unemployment Rate
  • 13:30 GMT – Canadian Unemployment Rate
  • 13:30 GMT – Canadian Employment Change
  • 15:00 GMT – Canadian Ivey PMI
  • 17:00 GMT – ECB President Draghi speaks

 

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