Daily Analysis - 15/06/2018
The ECB announced in its statement on Thursday that it plans to reduce monthly asset purchases between October and December to 15 billion euros until the end of 2018 when it will finally end the QE program. While this was widely expected by the markets, what came as a surprise was the prospect of interest rates staying at record lows at least until next summer 2019.
The DAX Index surged 2.5% as the euro tumbles after the ECB meeting. The German Index usually has an inverse relationship with the euro, since a cheaper currency will help German exporters. The index rose from the 12800 area to above 13100 soon after the ECB announcement.
The dollar surged against the yen on Thursday after some positive U.S. economic data. Retail sales beat forecasts and rose 0.8% in May versus a 0.4% increase that was expected. This signaled a strong economic pickup in the American economy. Other data showed falling jobless claims. The data support Federal Reserve Chairman Jerome Powell’s view of a strong U.S economy. In a statement after the FOMC meeting on Wednesday, Powel said the economy is in “great shape”. He projected two more rate hikes in 2018 after this week’s 25 basis-point increase.
The Japanese central bank held its policy meeting today and as expected, it kept interest rates unchanged. In a statement accompanying the decision the BOJ suggested it sees a slowing pace of inflation.
