Euro Dives As ECB Reduces But Extends Its Stimulus

Overview

  • Euro slumps after ECB reveals withdrawal plans
  • Stocks rally
  • Oil prices mixed

European Market

The European Central Bank announced it would start to withdraw from its easy money scheme by reducing its bond purchasing programme by €30 billion, as expected.

The euro fell off its five-session high, declining 0.5% against the dollar.

Meanwhile, the regions stocks are feeling more positive thanks to lower-for-longer interest rates. The eurozone’s proxy, the DAX 30, is 0.5% stronger and France’s CAC 40 is 0.8% higher. After slumping over the past few weeks, Spain’s IBEX 35 has increased 2% as hopes for a new election in Catalonia support stocks.

The pound is 0.4% weaker against the dollar and 0.1% lower against the euro. Sterling’s sell-off has helped the FTSE 100 to add 0.3% to its value.

US Markets

The dollar is 0.4% against most major currency pairs, supported by the weaker euro. Additionally, some dovish Fed chair candidates are out of the race, including current leader Janet Yellen. This increases the likelihood that Donald Trump will choose John Taylor, one of the most hawkish out of the line-up.

After the largest drop in seven-weeks yesterday, the S&P 500 is rebounding. Wall Street’s proxy is 0.1% higher, while the Dow Jones is 0.15% stronger.

Asia-Pacific Markets

The Japanese yen is 0.09% weaker against the dollar. Still, the currency has rebounded from recent lows after the re-election of Shinzo Abe.

After yesterday’s slump in the US stock market, Asian equities were mixed overnight. However, now as we edge closer to the US opening bell, the bullish tones have spread across equity markets.

Hong Kong’s HSI is 0.1% higher and China A50 is 0.9% stronger, while the Nikkei 225 has added 0.4%.

Commodity Markets

Oil prices are mixed as investors await next month’s OPEC meeting. Brent oil, the international benchmark, is 0.1% weaker, while the US benchmark, crude oil, is 0.1% higher.

Natural gas storages are due to be released at 14:30 GMT, which could give oil a fresh direction.

The stronger dollar and lack of demand for safe-haven assets has caused gold to decline by 0.13%. The precious metal is now trading at its lowest point in over three weeks, at $1275.