Following ECB’s dovish resolution yesterday, the EUR hit 3-month lows, while the UK GDP is rising. Analysts anticipate a positive BEA report, which will reflect a 2.9% QoQ saar growth, higher than the 2.6% consensus ahead of the estimate Q3 GDP release.
ECB extended its bond-buying programme to September 2018, leaving enough room for continued buying action after that date. Tokyo Reuters reported earlier this morning that ECB would get on their way with the monthly reduction plan by half to 30 billion euros ($34.90 billion) as of January.
ECB President Mario Draghi’s dovish comment that ‘an ample degree of monetary stimulus remains necessary’ as the inflation is going up in the Euro area, sent the single currency to its deep lows, making it hit 1.1625 in the Asian session, the lowest levels since July. Comparatively, Euro’s biggest competitor, the USD rallies ahead of the US Q3 advance GDP report and the revised UoM snetiment, while investors are seeking more impetus from this release in the American currency’s trading today.
EURUSD trades timidly around 1.6305 and it’s likely to experience consolidation.
Overall, the EUR lost 0.15% on this news and 1.3% for the week.
Bill Northey, US Bank of Helena, Montana Chief Investment Office reacted to Draghi’s comment, saying that ‘The concept of tapering would be removal of accommodation, so it wasn’t exactly what the market was expecting – it was a dovish form of tapering, as there was both an extension and a reduction’.
Shifting focus on the GBP, the cable failed to capitalise on Wednesday as the US-UK bond yield differential overlooked the rising UK GDP figure and continued to grow in the GBP-negative manner. Could the GBPUSD set off on a bearish path?
The pair started the day around 1.31105 and seems to be following a downtrend.
The US dollar index, which tracks the dollar’s evolution against other six major traded currencies, added 0.2%, reaching 94.80 or 3-month highs and is off towards a weekly gain of 1.1%.