Sunday, 21 October, 2018

Takeaways From the ECB's Policy Announcement

Are S&P 500 EUR  USD Unconcerned by Trade Wars or Shell-shocked Keep Vigilance on the Dollar as Trump Signs Tariffs and Euro with ECB
Ginger Lawrence | 10 March, 2018, 02:36

Last week the S&P 500 fell 1.3% on fears of a global trade war as Trump announced the United States was adopting tariffs of 25% on steel and 10% on aluminium. Traders are also assessing the potential risk that wage inflation poses ahead of non-farm payrolls.

European Central Bank President Mario Draghi said on Thursday that the Governing Council's latest decision to drop the easing bias on asset purchases was taken unanimously.

The Iseq index edged up 0.25 per cent. Ryanair added 1.75 per cent to €16.28, despite indicating that its decision to negotiate with trade unions would likely add €100 million to its costs on a full year.

Trump's impromptu announcement last week that he meant to slap 25 percent taxes on steel imports and 10 percent on aluminium revived the spectre of a trade war between the United States and major trade allies like Canada or the European Union.

The European Union has said it would retaliate immediately against any US tariffs, which are based on a 1962 USA law allowing such measures for "national security". "You have some people concerned that they're going to be put in place, then you get a headline overnight talking about countries that might receive exemptions". Trump is expected to sign a document to establish steel and aluminium tariffs by 3:30pm eastern U.S. time, a source told Reuters. The ECB's surprise change in language signaled its confidence in the euro area economy even as the concerns rumble on.

During a press conference after the decision was released, European Central Bank chief Mario Draghi added that unilateral decisions on trade were "dangerous".

A notable hawkish spin has emerged at multiple central banks in recent months.

The Chinese People's Political Consultative Conference runs through March 15 and overlaps with the National People's Congress meetings in Beijing, through March 20.

Highlighting the strength of the global economy, Chinese data showed both exports and imports rose more than 20% in the first two months of this year from a year earlier. IT10YT=RR The pan-European STOXX 600 hit a fresh session high as Draghi spoke, up more than 1 percent, while euro zone stocks.STOXXE were also at a session high and up a similar percentage.

Notre Dame Rallies Over Virginia Tech
Farrell's 3-pointer with 13:55 left first ignited the closing run that, initially, Virginia Tech met shot-for-shot. Gibbs dug into that Tech lead and got the small pocket of Notre Dame fans believing this thing wasn't over.

In the currency market, the dollar stabilised against other major currencies after its hit from fears about the tariff plan, while the Mexican peso and Canadian dollar recovered from steep losses.

The MSCI Emerging Market Index gained 0.4 percent to the highest in more than a week.

March U.S. Dollar Index futures settled at 90.156, up 0.549 or +0.61%.

Portuguese bond yields pulled back from Thursday's six-week low around 1.79 percent PT10YT=RR , but were set for their biggest weekly fall since November, of around 12 bps.

For 2020, the inflation forecast was raised to 1.7 percent from 1.5 percent.

The Japanese yen dropped 0.1 percent to 106.14 per dollar.

On the currency markets the dovish message won out.

Pizza delivery firm Domino's Pizza rose 2.6 per cent following a better-than-expected 10.2 per cent rise in its full year pretax profit.

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