Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Here's The Most Important Takeaway From The ECB

By Kathy LienMarket OverviewSep 10, 2021 01:24AM ET
www.investing.com/analysis/heres-the-most-important-takeaway-from-the-ecb-200601501
Here's The Most Important Takeaway From The ECB
By Kathy Lien   |  Sep 10, 2021 01:24AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
The European Central Bank delivered exactly what the market expected on Thursday. They slowed bond purchases and raise their inflation forecasts. Policymakers made it clear that the change was a “recalibration” and not “taper” because the change was made to the Pandemic Purchase Program (PEPP) and not the Asset Purchase Program (APP). They also boosted their 2021 growth outlook but shaved their 2022 GDP forecast by 0.1%. Initially traders took the euro lower after the announcement but the single currency managed to recover its losses to end the day unchanged against the greenback. Part of this can be attributed to the lack of surprise from the ECB but investors also sold US dollars as Treasury yields declined.
 
The most important takeaway from today’s ECB meeting is the central bank’s optimism. Although they went to lengths to downplay today’s move with ECB President Lagarde directly saying “this lady isn’t tapering,” and “the current increase in inflation is expected to be largely temporary,” their optimism was undeniable. She described the “rebound phase” of the economic recovery as “increasingly advanced,” and “the economy is expected to return to its prepandemic size by the end of the year.” This has led many investors to believe the ECB will confirm in December the end of PEPP in March 2022 as planned.  “A full recovery” could be delayed by Delta but the unanimous decision says a lot about the overall attitude in the central bank. This is positive for euro even though in the near term as we head into September FOMC, the market’s appetite for US dollars should drive EUR/USD flows.
 
The US dollar traded lower against all of the major currencies despite very good jobless claims. First time filings for unemployment claims dropped sharply from 345K to 310K, which are fresh pandemic lows.  Even with a spike in new claims in Louisiana after Hurricane Ida, the data underscores the impact of labor shortages. Yet the dollar fell because 10-year Treasury yields dropped more than 3% on the back of a very strong 30-year bond auction that reflected concerns about the debt ceiling and taper timing. 
 
The Canadian dollar also fell sharply aa oil prices u-turned lower. China took the unprecedented step of releasing its strategic oil supply by announcing plans to auction off reserves in an effort to ease the pressure on domestic refineries by driving prices lower. This is a big deal for the oil market because it is a sign that China is willing to use its reserves to influence the market. USD/CAD is in focus tomorrow with Canadian labor market numbers scheduled for release. The Bank of Canada left rates unchanged this week but with reopenings and high vaccination rates, strong job growth is expected for August. The employment component of IVEY PMI also ticked higher. 
 
Sterling bucked a 3 day downtrend to end the day higher against the greenback. Like loonie, todays’s monthly GDP, trade balance and industrial production reports puts GBP in focus. Unfortunately the recent decline in manufacturing PMI tips the scale lower for these reports. The Australian and New Zealand dollars traded higher as well with NZD leading the gains thanks to strong manufacturing sales. The RBNZ remains one of the most hawkish central banks. The Australian dollar found no relief from the government’s “roadmap to freedom” that called for restrictions to ease when 70% adults have had 2 vaccine doses. With over 40% full vaccinated and 75% receiving at least one dose, this is likely to happen in mid-October.  
 
Here's The Most Important Takeaway From The ECB
 

Related Articles

Here's The Most Important Takeaway From The ECB

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Fauzi Ghozali
Fauzi Ghozali Sep 10, 2021 4:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thank you for review. this ia really important to watch.
Luqman Firdaus
Luqman Firdaus Sep 10, 2021 1:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
ok money
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email