Dovish ECB sets European shares up for best week since early March

Dovish ECB sets European shares up for best week since early March

The ECB said its Governing Council will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of Euro 30 billion until the end of September 2018.

The dollar advanced above ¥110.50 in Tokyo trading Friday, reflecting its surge against the euro following the European Central Bank's decision to keep policy interest rates low.

Analysts said that although the expected announcement would probably not be a total surprise to markets - an initial list was released by Washington a few months ago - it would still make investors concerned that the window for averting a trade war may be closing.

The dollar slipped against its global peers today as the U.S. slapped new tariffs on Chinese goods, reviving the markets' fears of a trade war, dealers said.

In the May statement, however, the U.S. central bank said that "economic activity has been rising at a moderate rate". After lifting interest rates to 2pc, its policymakers geared markets up for two more increases in borrowing rates in the U.S. this year through its dotplot projections.

The New Zealand dollar rose against a broadly weaker euro after the European Central Bank said it may not hike interest rates until late 2019 while stronger USA retail sales data also helped lift the greenback.

The European Central Bank is to wind down the stimulus provided by is its massive three-year bond-buying programme to the eurozone economy by the end of the year.

Mario Draghi
Image European Central Bank president Mario Draghi

Interest rates remained unchanged at the ECB's June meeting. U.S. President Donald Trump has made a decision to impose "pretty significant" tariffs and will announce a list targeting $50 billion of Chinese goods on Friday, and a second wave of products worth $100 billion has been cued up. Inflation is projected to hit 1.7 per cent this year, below the bank's target of just under 2 per cent.

Sterling was 0.16 percent higher at $1.3282.

The single currency was hammered on trading floors after the ECB's announcement Thursday, which was accompanied by a cut in its eurozone growth outlook, citing rising protectionism and global trade fears.

The Dow Jones Industrial Average fell 49.71 points, or 0.2 percent, to 25,151.49, but the S&P 500 gained 4.48 points, or 0.16 percent, to 2,780.11 and the Nasdaq Composite added 50.68 points, or 0.66 percent, to 7,746.38.

Though full policy normalisation will take years, investors are already braced for the end of easy money from the world's central banks. That provided extra support for the notes, which have been boosted by more euro-friendly rhetoric from officials in Italy's newly formed government.

Oil prices were down, facing pressure from evidence of rising US output and uncertainty over supply, before a meeting next week of the world's largest exporters.

China wants UN Security Council to lift sanctions on North Korea
Their signed commitment reaffirms an agreement struck between the leaders of North and South Korea. He called the drills " provocative ", and said ending the exercises will also save the US money.

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