Euro bounced as ECB delayed further stimulus

December 5, 2014

European Central Bank remained at the current rate level as widely expected. However, in the statement, ECB cut the growth prospects of the next three years to 0.8%, 1.0% and 1.5%, lower than last expectation. The inflation expectation was also cut because of oil price drop and economic weakness.

Draghi said in the press that ECB will re-evaluate the current stimulus policy and implied that ECB may not take further step before February. Euro rocketed to 1.2450 after Draghi’s speech, that led other majors to rebound against Dollar.

Yen depreciated against Dollar to 120 level for the first time since July 2007, but did not stay beyond that level for long. The market participants are hesitating because of this critical resistance as the re-election is close. The next target for Dollar Yen is 125, however, we may need to wait for a more confirmed breakout for re-entry of Yen.

Sterling stayed at low after BOE decided not to change the current monetary policy. Euro Pound also rebounded yesterday after declining for three days. The triangle consolidation pattern was effective for now and the pair may rise to 0.8040 again.

The Asian stock markets closed higher following the overnight US stocks. The Shanghai Composite rocketed 4.31% to 2899. ASX 200 also rebounded 0.88% to 5369. The Nikkei Stock Average was up 0.94%. European stock markets mostly fell as ECB failed to take new steps to ease monetary policy, the UK FTSE lost 0.55%, the German DAX was down 1.21% and the French CAC Index lost 1.55%. US market edged lower. The S&P 500 declined 0.13% to 2072. The Dow closed 0.07% lower to 17900, and the Nasdaq Composite Index lost 0.11% to 4769.

On the data front, German Factory Orders will be released at 18:00 AEDST. At midnight, a series of North America data will be release, such as Canada and US Unemployment Rate and Trade Balance, and Non-Farm Employment Change as well.

Have a great trading day!

Anthony


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