The euro took a beating across the board after ECB hinted that they’re not discussing QE exit anytime soon.
Meanwhile, the Greenback shrugged off weaker bond yields and proceeded to extend its gains.
- Draghi: we didn’t discuss monetary policy per se
- Draghi: ECB adopting “caution tempered by an unchanged confidence”
- U.S. durable goods orders improves by 2.6% in March
- U.S. core durable goods orders flat vs. 0.5% expected, 1.0% previous
- U.S. initial jobless claims up down from 233K to 209K
- U.S. advanced goods trade deficit registers at $68.0B vs. $75.9B deficit in February
- U.K. GfK consumer confidence clocks in at -9 vs. -7 expected and previous
- New Zealand prints 85M NZD trade deficit in March
Draghi’s post-decision presser
The biggest story of the hour is European Central Bank (ECB) President Mario Draghi giving a presser after the central bank printed its decision to keep its policies steady in April.
The head honcho shared that
“Incoming information since our meeting in early March points towards some (economic growth) moderation while remaining consistent with a solid and broad-based expansion of the euro area economy.”
However, he also added that
“The underlying strength of the euro area economy continues to support our confidence that inflation will converge towards our inflation aim of below, but close to 2 percent over the medium-term.”
What caught some market players by surprise is that Draghi and his team didn’t discuss monetary policy OR the euro’s recent strength at all.
He only admitted that “we didn’t discuss monetary policy per se,” and that they will just “continue to monitor developments in the exchange rate and other financial conditions with regard to their possible implications for the inflation outlook.”
While the ECB shrugged off recent weaknesses in the euro zone’ s economic reports as “normalization” that’s only to be expected after several quarters of above-average growth, the decision to not discuss QE exit – especially when others had been expecting it – disappointed a lot of the euro bulls.
Overall risk appetite
The closely-watched 10-year bond yields finally pulled back after hitting its highest since January 2014 on Wednesday. And with Uncle Sam’s economic reports mostly coming in better-than-expected, traders felt confident to take on more risks.
- U.S. 2-year yield is up to 2.490% (+0.20%)
- U.S. 10-year yield is down to 2.990% (-3.60%)
- U.S. 30-year yield is down to 3.174% (-3.70%)
The pullback in U.S. bond yields, solid earnings results, and a rebound in tech stocks pushed U.S. equities higher:
- Dow is up by 238 points to 24,322 (0.99%)
- S&P 500 is up by 27 points to 2,666 (1.04%)
- Nasdaq is up by 114 points to 7,118 (1.64%)
Major Market Mover(s):
The common currency took the hardest hits after Draghi’s presser disappointed traders who were expecting word on a possible QE exit later this year.
EUR/USD fell to 1.2104 after hitting a session high of 1.2211, EUR/JPY dropped to 132.38 after reaching 133.22, EUR/GBP rolled down from .8728 to .8698, and EUR/AUD slipped from 1.6106 to 1.6033.
Whether it’s in commiseration with its fellow European currency or a bit of SNB manipulation, the Swiss franc turned out to be the biggest loser among the major currencies today.
USD/CHF shot up from .9847 to .9892, CHF/JPY fell from 110.89 to 110.54, NZD/CHF popped up from .6964 to .6987, and GBP/CHF rose from 1.3742 to 1.3768.
Watch Out For:
- 11:30 pm GMT: Tokyo’s core CPI to remain at 0.8%?
- 11:30 pm GMT: Japan’s unemployment rate expected to steady at 2.5%
- 11:30 pm GMT: Japan’s preliminary industrial production (0.5% expected, 4.1% previous)
- 11:30 pm GMT: Japan’s retail sales (y/y) (1.5% expected, 1.7% previous)
- 1:30 am GMT: Australia’s PPI (q/q) (0.4% expected, 0.6% previous)
- BOJ’s policy decision + presser on tap during the Asian session