The European Central Bank will not tighten policy to counter surging inflation as the rise is temporary and due almost entirely to rising oil prices, ECB President Mario Draghi said on Monday, brushing aside calls for the ECB to reduce stimulus.
The Bank of Japan will release its Monetary policy statement and press conference between the end of Monday and the beginning of Tuesday Dec. 20. Analysts are expecting the central bank to keep the quantitative easing unchanged and negative rates on hold. The weak Japanese yen and hawkish U.S. growth expectations have given the BOJ room to hold and even improve its economy assessment.
The dollar has pulled back in recent days after its U.S. elections-inspired rally faded as investors made a more sober assessment of the whole political and economic situation there and realised that the currency had gone up too far, too fast. In the U.S. nothing has changed yet and it will be a while before president-elect Donald Trump’s fiscal plans will be put into action.
Stock markets were erratic on Thursday with most major arenas violently swinging between losses and gains as the messy combination of depressed oil prices, a resurgent U.S. Dollar and rising European Central Bank stimulus hopes kept investors on edge.
The European Central Bank kept interest rates on hold at historic lows on Thursday and its president said the Bank was committed to pursuing substantial asset purchases aimed at spurring growth and inflation.
The U.S. dollar advanced against most majors with the Canadian and Australian dollars the outliers as commodity prices continue to rally after the OPEC production cut deal was announced. Chinese data is once again in the spotlight with the release of its real gross domestic product (GDP) and industrial production on Tuesday, Oct. 18 at 10:00 pm EDT.
European stock markets have started Friday’s session brightly, extending their advance from the late afternoon rebound on Thursday. The rally has probably taken many people by surprise, although this shouldn’t be the case given that the markets in both the UK and United States are still very close to their all-time highs.