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

European Central Bank head Mario Draghi has expressed concern about U.S. President Donald Trump’s announced trade measures, saying the immediate spillover “is not going to be big” but that “unilateral decisions are risky”.

This fuelled demand for safe-haven government bonds, and U.S. Treasury yields extended overnight falls.

The bank is not expected to make any changes to monetary policy in its March policy decision, but investors will be more focused on the bank’s tone on outlook.

Trump was expected to sign a presidential proclamation to establish the tariffs during a ceremony on Thursday, but a White House official said later it could slide into Friday because documents had to be cleared through a legal process. “With political risk in Europe weighing on sentiment and trade war fears lingering in the background, Draghi could end up disappointing markets today”, he noted.

The index, which tracks the greenback versus a basket of six currencies, rose 0.489 point or 0.55 percent, to 90.126. In France, the Cac 40 rose 1.3 per cent, while the German Dax finished 0.9 per cent higher.

Wednesday’s news was mixed enough to see the Pound dip and then strengthen again by the end of the day.

The euro has turned lower vs. the dollar by 0.3% and the Stoxx 600 has moved from flat to up 0.8%.

Earlier, euro dropped as the European Central Bank signaled caution on inflation and protectionism.

At 7:45 am Eastern Time, the European Central Bank will announce its latest monetary policy decision, followed 45 minutes later by a press conference with Mario Draghi.

“There is a certain worry or concern about the state of worldwide relations, because if you put tariffs against what are your allies, one wonders who the enemies are”, said Draghi.

An investor checks stock information on a mobile phone at a brokerage house in Shanghai, China February 9, 2018.

Following the announcement, the euro index fell 0.2 percent to €97.44.

Whilst the US President has perceivably softened his stance, offering a 30-day exemption on the tariffs for Canada and Mexico, this is entirely dependent on the both nations giving the US a “fairer” shake in the renewed NAFTA deal, making his approach one of leverage, rather than an indication that he is stepping down. Express Scripts shares jumped 8.6 percent while Cigna dropped 11.5 percent.

The dollar was down by 0.1 percent to 1.2893 against its Canadian counterpart.

Economic growth of 2.7 percent year on year in the fourth quarter has made that promise increasingly outdated.

Oil fell, following a sharp rise in the dollar, steering prices towards a second weekly decline.

The ECB staff outlook for inflation doesn’t have it nearing its close to but just below 2% target for at least another three years, and the latest Reuters surveys of private sector economists suggest the same.

In response, the gold price was down slightly (-0.35%) to $1,320/oz after slipping in the early morning hours.