Market Roundup
- ECB cuts depo rate 10bps as expected, cuts refinancing rate 5bps as well, lifts APP from EUR 60b to 80b.
- ECBs Draghi does not expect further cuts in future, ECB staff sees HICP 1.3% in '17, 0.1% in '16.
- ECB to launch new series of LTROs w/4-yr maturity, ECB to buy non-bank corporate debt.
- What the ECB did at its March 10 meeting.
- US jobless hit 5-mos low at 259k (forecast 275k), continued claims below forecast (2.225m v 2.255m forecast).
- Denmark's central bank keeps rates unchanged (-0.40%) despite ECB cut.
- Short-term bond/bund yields surge as ECB signals rate freeze.
- Iran says it will freeze oil production only after regaining market share.
- Gold rises more than 1% as euro rebounds on ECB comments, Fed Meet Mar 16 now in focus.
- FTSE hits 2-week closing low as ECB-fuelled rally fizzles out, DAX gains reversed end session -1.8%.
- Brazil launches 2026 global bond, first since rating cuts.
Looking Ahead - Economic Data (GMT)
- 21:45 New Zealand Food Price Index* Feb 2.00%-previous
- 21:45 New Zealand Manufacturing PMI * Feb 57.9- previous
- 23:50 Japan Business Survey Index*Q1 380.00%- previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1150 levels and currently trading at 1.1180 levels. The pair has made session high at 1.1218 and hit lows at 1.0820 levels. The pair initially declined sharply from 1.0970 levels, after ECB dropped its main refinancing rate to zero on Thursday, from 0.05 percent, while expanding its quantitative easing asset-buying program to 80 billion euros a month from 60 billion euros and cutting its deposit rate to -0.4 percent from -0.3 percent. After the rate decision the pair hit low at 1.0820, later it rebounded sharply erasing all losses after European Central Bank chief Mario Draghi signaled that further interest rate cuts in the euro zone are unlikely. In the afternoon trading the euro gradually inched higher against the dollar by hitting three-week high of $1.1158 as money market rates in the euro zone rose to price out further deposit rate cuts. The euro was last at $1.1120, up 1.1 percent.
GBP/USD is supported in the range of 1.4247 levels and currently trading at 1.4276 levels. It reached session high at 1.4323 and hit low at 1.4119 levels. The cable fell from 1.4220 in early US session towards 1.4113 levels, after European Central Bank cut its refinancing rate to zero from 0.05 percent on Thursday. However the pair rebounded strong as the sterling was pulled higher by euro which bounced back after hitting lows at 1.0820 against the dollar after European Central Bank chief Mario Draghi indicated that further interest rate cuts in the euro zone is ruled out in 2016. Against the dollar, sterling was trading last at at $1.4280. While the currency has bounced from 7-year lows of $1.3876 struck in late February, it has failed to rise past $1.43 with investors cautious about buying it in a big way. Meanwhile, Prime Minister David Cameron warned a British exit from the European Union would put pressure on sterling. British voters will decide in a referendum on June 23 whether the country stays in the EU or leaves.
USD/CAD is supported at 1.3330 levels and is trading at 1.3348 levels. It has made session high at 1.3395 and lows at 1.3324 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as crude oil prices fell, with the currency pulling back from a nearly four-month high reached on Wednesday. Oil prices fell after hitting three-month highs this week as an OPEC meeting aimed at freezing output appeared unlikely without Iran's participation. The Canadian dollar fluctuated in volatile trading against other major currencies after the European Central Bank unveiled a host of measures to stimulate growth and inflation in the euro zone, but ECB said it did not think it will be necessary to cut rates further. Canadian new home prices rose in January, data from Statistics Canada showed on Thursday. The national 0.1 percent price gain fell slightly short of economists' expectations for an increase of 0.2 percent.
AUD/USD is supported around 0.7412 levels and currently trading at 0.7453 levels. It hit session high at 0.7456 and made session lows at 0.7422 levels. Australian dollar hovered near eight-month highs against US dollar on Thursday on hopes that rates will remain steady for at least the next couple of months. The Aussie proved resilient in volatile trading as European Central Bank cut its main refinancing rate to zero on Thursday, from 0.05 percent and expanded its bond-buying program in an attempt to boost growth and inflation in the currency bloc. The Australian dollar eased to $0.7427, from $0.7506 early, but well within reach of $0.7528, a level last touched in July. The Aussie has gained 4.5 percent so far this month and charts point to a test of $0.7653, the 61.8 percent retracement of the May 2015-January 2016 move. Resistance was found around $0.7417.
Equities Recap
European shares fell on Thursday after the European Central Bank President Mario Draghi said more rate cuts were unlikely, but bank shares outperformed on plans for a new round of cheap funding.
Britain's blue-chip FTSE 100 index closed down by 1.6 percent, France's benchmark CAC-40 index closed down by 1.3 percent, Germany's DAX ended down 2.1 percent, meanwhile the pan-European Eurofirst 300 index was downby 1.48 percent.
U.S. stock stocks ended little changed in a volatile session on Thursday after the European Central Bank reduced interest rates but ECB chief Mario Draghi disappointed investors that expected multiple rate cuts by saying more were unlikely.
Dow Jones closed down by 0.03 percent, S&P 500 ended up by 0.02 percent, Nasdaq finished the day down by 0.27 percent.
Treasuries Recap
U.S. Treasury yields rose in choppy trading after European Central Bank President Mario Draghi suggested he does not anticipate deepening the ECB interest rate cuts announced on Thursday.
The benchmark 10-year note was last down 11/32 in price to yield 1.931 percent, up from 1.892 percent on Wednesday.
The 30-year bond was last down 11/32 in price to yield 2.699 percent, up from 2.683 percent on Wednesday.
Commodities Recap
Gold rebounded by more than 1 percent on Thursday as the euro bounced back from a six-week low against the dollar after European Central Bank (ECB) chief Mario Draghi indicated that further interest rate cuts in the euro zone are unlikely.
Spot gold was up at $1,237.06 an ounce, but by 2:46 p.m. EST (1946 GMT) it had gained 1.4 percent to $1,270.10. U.S. gold futures for April delivery settled up 1.2 percent at $1,272.80.
Oil prices fell on Thursday, with U.S. crude retreating from three-month highs as refinery maintenance looked set to boost record domestic crude stockpiles, while an OPEC meeting aimed at freezing output appeared unlikely without Iran's participation.
Global oil benchmark Brent settled down $1.02, or 2.5 percent, at $40.05 a barrel, after hitting a session low at$39.63.
U.S. crude fell 45 cents to finish at $37.84, having recovered from an intraday low of $37.21.
