Euro Collapses after ECB President Gives Cautious Press Conference
Traders had been eagerly anticipating today’s European Central Bank (ECB) press conference, but it has backfired spectacularly and led to widespread Euro losses.
The ECB left interest rates at 0% as expected, but notably cut its monthly quantitative easing (QE) limit from 60bn to 30bn.
While this was initially received positively, it quickly became apparent that it was just an adjustment, not the start of QE tapering.
At the ECB press conference, President Mario Draghi emphasised that there was still a long way to go before the central bank would consider higher interest rates, leading to an overall Euro slump.
Looking at the ECB’s long-term goals, Nancy Curtin of Close Brothers Asset Management said;
‘Ten years on from the financial crash, the era of quantitative easing is yet to run its course in Europe. Draghi confirmed that the bond buying programme would be tapered, but it has hardly come to an end.
This slow, steady and widely predicted approach hopes to rein in the Euro from rising further, which is limiting the earnings capacity of European exporters, at the same time as avoiding a European taper tantrum in the markets.
Whether one can be achieved without the other remains to be seen’.
A pair of speeches are due from ECB officials on Friday, which may be enough to shift the Euro out of its present poor state.
These will come from Peter Praet and Ignazio Angeloni, both during the morning.
New Zealand Dollar Advances despite Trade Deficit Disappointment
The New Zealand Dollar has made a 0.3% advance against the Euro today, but has fallen elsewhere against the Australian Dollar and Chinese Yuan.
This mixed performance comes after a disappointing result for the NZ trade balance, covering the September period.
The NZ trade deficit had been expected to reduce during the month, but failed to fall by as much as expected.
From the initial -1179m figure, the currency has since dropped to -1143, a shortfall from the anticipated -900m range.
This has disappointed NZD traders, while the latest political news out of the country has caused further concern.
It has been reported that foreign buyers will be prohibited from buying existing homes in New Zealand, as a way of preventing wealthy overseas speculation.
The next significant NZ economic news will be Tuesday’s business confidence reading for October.
This is tipped to show a reduction in confidence, but perhaps not enough to open the door for a EUR/NZD rate rise.