Thursday, 24 January, 2019

Draghi: ECB will be cautious in adjusting stimulus effort

BELGIUM-EU-ECB-ECONOMY Mario Draghi president of the European Central Bank spoke to students in Portugal
Melinda Barton | 29 June, 2017, 07:31

On currency markets the euro extended gains against the dollar after European Central Bank boss Mario Draghi said the EU was enjoying a newfound confidence that could unlock demand and investment.

U.S. Senate Republican leaders postponed a vote on a healthcare overhaul on Tuesday after resistance from members of their own party, and President Donald Trump summoned Republican senators to the White House to urge them to break the impasse.

"To me, it seems the change in policy will not be very substantial, so I think in the coming days, European Central Bank officials will try to water down Draghi's comments", he said. Yields on 10-year Treasury debt also fell on June 14.

Against the perceived safe-haven yen, the dollar slipped 0.3 per cent to 112.135 after rising as high as 112.285 yen, its highest since May 17.

At 1225 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.1%, but Nasdaq futures were down 0.4%.

ASIA'S DAY: Japan's Nikkei 225 rose 0.4 percent to 20,225.09 while South Korea's Kospi added 0.1 percent to 2,391.95.

Bank stocks gained as the yield between five-year notes and 30-year bonds steepened, after falling to their lowest level since late 2007 overnight.

The delay in the healthcare vote sent US stocks to session lows as it brought back worries about the time table of President Donald Trump's business-friendly agenda.

Speaking in London, Federal Reserve Chair Janet Yellen did little to suggest United States policy makers have altered plans for a third interest rate hike later this year, saying "it will be appropriate to the attainment of our goals to raise interest rates very gradually". "This is a blow to the Trump agenda because it makes tax cuts all the more hard", said Greg McKenna, chief market strategist at AxiTrader.

While Draghi was speaking, the euro was surging by as much as one half of one percent for the day moving up to $1.125, which was it highest point since January 14.

ENERGY: Oil futures fell, with benchmark US crude slipping 17 cents to $44.07 a barrel in electronic trading on the New York Mercantile Exchange.

USDCAD rose by almost 0.5% to currently trade at 1.3138 following comments made by Bank of Canada Governor Poloz that interest rate cuts "have done their job and that levels are now extraordinarily low". Google says it is considering an appeal.

Officials in the USA central bank have said they will look beyond a slowdown of inflation and continue their current interest rate increase trajectory although investors have become skeptical and pricing in the market shows just a chance of 40% of an increase at the December meeting of the Fed.

"If we want to bring inflation to our target of below but close to 2 percent then we have to persist in the type of monetary policy that we been adopting".

Spot gold XAU= added 0.5 percent to $1,250.04 an ounce.

Oil prices rose about 1 percent but concerns remained that a three-year supply glut is far from over.