The euro declined as the European Central Bank (ECB) refrained from commenting on the future of the Quantitative Easing (QE) programme, due to end on March 2017, leading investors to think that the bank will not end its asset purchases in an abrupt way.
ECB President Mario Draghi said the Committee had not discussed regarding the end of the QE, at his press conference post the ECB meeting, triggering discussions on potential ‘QE engineering’ to allow the viability of the programme and to maintain the monetary conditions loose in the Eurozone.
The EUR/USD declined below the 1.0900 handle. The third weekly loss in the EUR/USD, hints at stronger downside potential for a mid-term decline towards the 1.0850/1.0800 area. The rising selling pressure in the euro should strengthen short-term offers at 0.9000 in the euro-pound.
The DAX is heading towards the 10800 resistance on the back of dovish ECB expectations, with a possible exhaustion of the short-term gains at this level, before a renewed attempt towards the 11000 level.
The yen and the pound kept quiet, and traded in a tight range close to their respective 50-, 100- and 200-hour moving averages.
The FTSE 100 opened mixed and is hesitating at the 7000p level. News that British American Tobacco (LON:BATS) (+3.50%) offered to buy Reynolds American (NYSE:RAI), aiming leadership in the US market adding Newport, Kent and Pall Mall to its product portfolio, triggered a rally in the sector, also sending Imperial Brands (LON:IMB) 2.37% higher in London. Together, BAT and IMB added 260 points to the FTSE 100.
Energy stocks (-0.35%) declined as WTI failed to clear offers at $52 for the second time in a week, suggesting a minor correction to $50/$49 zone.
The US dollar remained well bid against all of its G10 counterparts in Asia, except the Aussie. The AUD/USD gained 0.25%, suggesting a will for recovery to 0.7680/0.7730 after having bumped into a decent profit taking at Thursday’s session.
Canada has a crowded economic calendar for the day. The retail sales and inflation data should determine whether or not the USD/CAD could stretch up to 1.3300 before the weekly closing bell.