Ipek Ozkardeskaya
Swissquote Bank Ltd
The European Central Bank (ECB) yesterday lowered its deposit facility rate by 25bp for the second time this year. But ECB Chief Christine Lagarde kept a poker face for what’s next and said that there is no commitment to a particular rate path. And mixed updates to forecasts didn’t help much either. The European officials revised their growth projections lower for the next two years and kept their inflation forecasts unchanged, but they increased their core inflation forecast for this year and the next. It was like tightening the belt on one side but loosening it on the other.
The euro gained, the yields rebounded and equities were lifted higher. Investors also tried to weigh in the 400-page proposal from Mario Draghi to revive the EU’s dormant economy.
In the US, the PPI came in higher-than-expected on a monthly basis, but lower-than-expected on a yearly basis. The US 2-year yield remains under a decent pressure, the US dollar remains sold across the board, and equities continue to recover.
Gold rallied to a fresh ATH on falling yields and softening US dollar, while crude oil tested the $70pb resistance despite unsupportive news from the IEA.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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