The surprise liquidity measures announced by China’s Central Bank and reduced manufacturing and the comments by the European Central Bank’s President Mario Draghi spurred the activity in the markets on Friday.
On Friday, ECB President Mario Draghi delivered a damning indictment on the Eurozone economy, saying that underlying growth momentum remains weak, the economic situation in the euro-area remains difficult and that the inflation situation has become more challenging.
At the beginning of this year, the People’s Bank of China (PBoC) engineered a decline in the renminbi, with the currency experiencing its biggest monthly drop on record against the U.S. dollar in March. The move was designed to dispel the belief that the yuan was a one-way bet and to ease pressure on China’s export sector.
One central bank ends QE, another increases it. This is not a trick, but a treat for the markets. The global equity markets found additional buoyancy on Friday after the Bank of Japan surprised the markets overnight by expanding its monetary easing program to about 80 trillion yen a year, up from Y60tn-Y70tn previously.