Today’s Spotlight Market
The European Central Bank (ECB) kept rates and other stimulus programs unchanged, citing no immediate threats to the European economy. What had surprised many traders was the central bank?s decision to not extend the deadline for the ECB?s quantitative easing programs. ECB President Mario Draghi stated “Our program is effective and we should focus on its implementation” in the post-decision press conference. Further, Mr. Draghi said there were no discussions regarding extending the QE program during the meeting. ?
Fundamentals
During the meeting, the bankers also made adjustments to inflation and growth rates for the Eurozone through 2018. The bank estimated 1.7% growth for 2016, up from 1.6%, but revised down 2017 and 2018 growth forecasts to 1.6%, down from their prior 1.7% estimate. The ECB also expects inflation to remain at 0.2% for 2016, cut its 2017 forecast to 1.2% and kept their forecast of 1.6% for 2018. Given these lackluster figures, the fact that the ECB did not, at the very least, it was somewhat surprising the bank did not discuss extending its quantitative easing program. Central bank watchers will now focus on whether or not Draghi & Co. will announce some sort of extension by year?s end. Euro traders will also be keeping a close on the Federal Reserve and its rate policies through year end. Any inkling of hawkish FOMC sentiment could hold back the Euro. The Euro gave back some gains after North Korea conducted its fifth nuclear test, the country?s second this year and largest to date. Traders went on the defensive, preferring the relative safety of the Yen and Gold.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Euro trading in a range centered around the 1.1250 level. The 50-day moving average has acted as support in the near-term. The Euro currently does not show any technical signs that it could be moving out of the range soon.
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