Published: Sat, March 10, 2018
World News | By Laverne Osborne

Euro jumps as European Central Bank hints at the end of quantitative easing

Euro jumps as European Central Bank hints at the end of quantitative easing

The US dollar rose against other major peers on Thursday, as fears over a trade war briefly fades, with the US data reporting higher jobless claims.

"As we pointed out before, sooner or later, the strong euro had to have some impact".

While the bloc's five-year growth run and a rapid drop in unemployment suggest that inflation will eventually rise, its rebound is still months away, complicated by the euro's rise against the dollar, which puts a lid on price growth.

The Pound to Euro (GBP/EUR) exchange rate was forced to retreat this afternoon as markets welcomed the European Central Bank's (ECB) decision to drop its easing bias. The Euro gave up all of its early gains against the dollar to finish lower after Draghi said monetary policy would remain "reactive" and that measures of underlying inflation were still subdued.

The latest monetary policy statement from the bank's governing council no longer mentioned that policymakers stood ready to increase their 30-billion-euro ($37.1 billion) per month asset-purchasing program "in terms of size or duration" if the global outlook becomes less favorable.

Traders were waiting to see if the rate setters would remove that particular bit, as it could indicate the end of QE is moving closer.

It also raised its growth forecast to 2.4 per cent for 2018, up from 2.3 per cent it expected in December.

STOCKS: European stocks edged up as investors were somewhat relieved after news that Trump could exclude some United States allies from his tariff list.

Snowy nor'easter brings threat of more power problems
Amtrak canceled some train service Wednesday, and regional rail trains in Philadelphia will be operating on a weekend schedule. More than 90,000 homes and businesses remained without power Wednesday, mostly in Pennsylvania, New Jersey and NY .

"The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00 percent, 0.25 percent and -0.4 percent respectively", said an European Central Bank statement. Interest rates were left unchanged which was to be expected, however they removed the wording "easing bias" from the asset purchasing statement which has led investors to believe that the Quantitative Easing program will be tapered towards the back end of the year and removed before the start of 2019. Last week, US President Donald Trump promised to impose tariffs on steel and aluminum imports, drawing criticism from Beijing. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

"The gender balance ought to be improved and this ought to happen at all levels", the European Central Bank president said on Thursday when asked by a journalist how the European Central Bank president assesses the institution's gender balance in light of International Women's Day.

Which stocks were in focus?

Britvic PLC (BVIC.LN) jumped 6.2% after Morgan Stanley upgraded the soft drinks maker's rating to overweight from equalweight.

Among specific stocks, BHP Billiton fell 2.8% while Hugo Boss declined 4.5% after the company said it is cautious on profits for 2018 as it has invested in stores and its website.

Analysts said the message could be complicated by US events.

The risks surrounding economic growth were still described as "broadly balanced", although "rising protectionism" was noted as a downside risk.

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