No Longer A Sense Of Urgency For Further Action — ECB’s Draghi

Where it will make a difference is in June as the futures now show only a 50% chance of tightening at the next quarterly meeting. They said in a note that the deposit rate would climb to minus 20 basis points next year, possibly delivered in two 10 bps increases in the second and fourth quarter of 2018.

“For years bonds have lived on soft growth, low inflation and unprecedented policy support”, Societe Generale strategist Ciaran O’Hagan said.

Markets will pay close attention to European Central Bank president, Mario Draghi’s 45 minutes press conference at 12:45 GMT. Since the last monetary policy meeting in January, inflation picked up significantly with widespread improvements in manufacturing and service sector activity.

The New Zealand dollar fell against the euro after the European Central Bank acknowledged the improving economic outlook in the single market region, and dropped below 69 U.S. cents for the first time since January on the expectation of a rate hike next week.

“More recent data like the German IFO report, trade balance and industrial production showed pockets of weakness”. “The pressures on core inflation remain contained, limited”, Draghi stressed.

Also significantly upwards has European Central Bank revised its forecast of inflation rates for the euro area, namely 1.7 percent in 2017 and 1.6 percent in 2018. The world’s top finance ministers and central bankers may no longer explicitly reject protectionism or competitive currency devaluations, according to an early draft of the communique, after the USA has accused some trade partners, particularly Germany, of exploiting a weak currency.

Traders will be looking ahead to next week for the next big Pound movements. Trump’s administration is expected to react should the dollar gain strongly against the currencies of major trade partners such as Germany, Japan and China. The currency extended its losses on the back of yesterday’s drop in dairy prices.

Elsewhere there is little to report on currencies. The near-term resistance for the pair is seen around 1.06270 -1.06400 and any break above will take the pair till 1.06996 (61.8% retracement of 1.08288 and 1.04936)/1.07140.

“If we go back to when the euro was created there have always been people who said “oh, it’s wrong, it’s a mistake, can not be done”.

He noted Britain’s decision to leave the European Union last June as a risk to the eurozone but said nothing had yet emerged.

It said global gross domestic product was expected to “pick up modestly” to around 3.5 percent in 2018, from just under 3 percent in 2016.

It may also debate but likely reject calls to give up a reference to lower rates or higher bond buying if necessary.

CAD – the oil plunge is obviously being felt in CAD as USDCAD has worked free of the sticky 1.3400-50 area and is ready to charge for new highs for the cycle, assuming United States data cooperates tomorrow and that Canadian data isn’t too spectacularly strong as well.