News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Daily Market Analysis
Central Booking

by Stephen Casey | December 8, 2016

– ECB Keeps Rate; Extends QE

– Chinese Data Boosts Risk Appetite

– Draghi To Address Anxious Markets

 

Good morning. Foreign exchange markets are abuzz this morning, awaiting the press conference from ECB Chairman Mario Draghi. The European Central Bank today concluded their last policy meeting, leaving the headline rate at unchanged at 0.0% and announcing a smaller than extension to their asset purchase program. The main event, Mr. Draghi’s press conference, is upcoming though, as investors and traders around the world finally get some specifics into the QE extension, which will only be €60 billion per month compared to the €80 per month done now. The current program is slated to end in March and it appears a new extension until at least December of 2017 will be formally announced. Major currencies slipped into a very tight range over the last few days, which continued on Thursday into the North American open.

Chinese data kicked things off overnight, as the world’s second largest economy announced a trade surplus of $44.6 billion for the month of November. Markets jumped on this result, which was supported by a better than expected imports figure, which rose by 6.7%. Japanese Q3 GDP was announced as having grown 1.3% but unfortunately, this was well below the lofty expectations of 2.2% annualized growth. The yen advanced slightly versus the greenback through Thursday’s overnight session. The EUR/USD steadily rose throughout the European morning session and exploded higher briefly, following the ECB announcement about thirty minutes ago. The single currency has erased those gains though as the market waits for Mr. Draghi to speak and offer more specifics on the extended QE program. Sterling was a bit higher as well but likely taking advantage of a weaker dollar, which was taken a long and deep breath over the last few days. The dollar index has slipped below 100 even as equity markets charge on – most notably here in the US.

Turning to North America, it is Thursday so we get another look into the health of the American labor sector. It is expected to be announced this morning that 263k Americans filed first-time unemployment claims for the week ending December 2nd. These numbers remain historically low, supporting the Fed’s likely decision to raise interest rates by 25 bps at their policy meeting next Wednesday. It’s been another solid week for US data, although the dollar’s found it harder to ascent with the market having fully priced in next week’s Fed meeting. The US 10-YR treasury yield has actually slipped lower this week, from 2.5% on Friday to 2.35% late yesterday, hindering the greenback. Univ. of Michigan consumer sentiment closes out the data calendar tomorrow morning, to be reported at 10am EST.

On Wednesday, oil prices dipped more than 2% as some doubt crept into the market concerning last month’s OPEC “deal.” The loonie has broken higher though, despite crude’s fall, taking advantage of the greenback’s slide. On Wednesday, the Bank of Canada concluded their own policy meeting and left the headline rate unchanged at 0.50%. Canadian policymakers acknowledged the US economy continues to be trending up, admitting their remains considerable economic slack on their end. There really weren’t many surprises in the statement, most notably on growth or inflation. Policymakers still see the current stance of policy as appropriate, which suggests to most analysts a “wait and see” approach on further moves until at least 2018.

To receive our market analysis direct to your inbox daily subscribe here!

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.

Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.

This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.

Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.

Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.

FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.

This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.

Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.

The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.

© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.