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 ECB ends quantitative easing

Published December 14, 2018

by Nicholas Cork

An air of calm hit the market yesterday after PM May survived her no confidence vote, leading to risk-on trading in our session which was reflected in a gain in regional equities, and an easing in some of the YEN’s recent safe haven gains.  The trend continued overnight as an ease in US-CHINA trade tensions was detected after China placed a large order for US soybeans,  but more importantly a noticeable tone down in the ‘Made in China 2025’ rhetoric which has been of concern to the USA https://www.scmp.com/economy/china-economy/article/2177856/beijing-no-longer-requires-local-governments-work-made-china.

In Brexit news,  after surviving a not overly convincing vote,  May is back in Brussels for talks with EU leaders over dinner this evening as the EU makes it repeatedly clear that the agreement is not up for renegotiation. An interesting note from Goldman Sachs released, saying that they now feel that with May surviving the vote it lowers the likelihood of a disorderly Brexit and increases the probability of a reversal of the decision to leave Europe itself.

In  Europe, the ECB have announced an end to their quantitative easing program at the end of this month, and have promised to keep interest rates at current record lows through to at least mid-2019.  ECB President Mario Draghi described the decision to end the 2.6 trillion euro QE program as “continuing confidence and increasing caution,” and Italy has cut their deficit target to 2.04% of output, seen as a major concession.

After feeling like an AUD collapse was imminent on Monday, the little battler has held support and spent the week safely within its 0.7150/0.7250 range.  Chinese data today the focus.

Have a nice weekend