This week has all been about major central bank meetings and as we had anticipated last week, it was indeed the European Central Bank that caused the most market impact with its decision. The euro/U.S. dollar (EUR/USD) currency pair almost fell 300 pips from its high on Thursday and European stocks rallied sharply after the ECB indicated that interest rates won’t rise until at least mid-2019, even if asset purchases were going to finish at the end of December.
The global push for bank regulation after the global financial crisis was appropriate and capital levels at big lenders may still be on the low side, European Central Bank supervisor Ignazio Angeloni said on Friday.
World stocks hit an all-time high on Thursday as the latest round of robust global data matched hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus.
Well, no one can say that they didn’t see that coming. After Brexit and the U.S. Presidential elections, stocks rallied hard after an initial wobble. The same, albeit to a lesser degree, has now happened in stocks with the case of the Italian referendum. In the forex markets, the EUR/USD dropped to near the 1.05 handle overnight before bouncing back to climb above 1.07.
The dollar gained ground against the yen on Tuesday after a roller-coaster 24 hours which traders say may just be a precursor to three weeks of risk-packed events for the $5 trillion a day currency market.
The European Central Bank is ready to temporarily step up purchases of Italian government bonds if the result of a crucial referendum on Sunday sharply drives up borrowing costs for the euro zone's largest debtor, central bank sources told Reuters.
U.S. and European government bond yields, the main driver of global borrowing costs, hit their highest since June on Monday as questions mounted about how the world's big central banks could react to a sudden bout of inflation.