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Euro Extends Rally Ahead Of ECB Press Conference

Published 12/05/2013, 04:11 AM
Updated 03/09/2019, 08:30 AM

After being bounded in range for a while, Euro finally edged higher against dollar today as markets await ECB rate decision. It's widely expected that ECB would keep rates unchanged after the surprise rate cut to 0.25% historical low last month. The main focus will be on the press conference as well as the updated economic projections. This will be the first time ECB publish forecast for 2015. Most importantly, the figures would give markets insights into inflation outlook in Eurozone over the medium term. A key question is when ECB expects inflation would climb back to the 2% target and could have impact on whether the central bank would do more over the coming months. BoE will also announce rate decision and it's widely expected to stand pat with interest rates and asset purchase target. BoE announce would likely be a non-event.

Overnight, the BOC delivered a more dovish message at its December meeting, noting increasing downside risks on inflation due to rising supply and increasing competition in the retail sector. Yet, it acknowledged that both global and domestic economies were remained on track. Policymakers left the target of the overnight rate unchanged at 1%. It is appearing more likely that the central bank would not being tightening until early 2015. More in BOC Turned Slightly Dovish, Warning Downside Inflation Risks.

Fed's Beige Book noted that the economy grew at a modest to moderate pace from early October to mid-November driven by housing and the auto and technology industries. Overall, the market still read yesterday's data as suggesting further improvements in US' economy and raised speculations that the Fed might begin tapering this month.

On the data front, Australian trade deficit came in wider than expected at AUD -529m in October. US will release challenger job cuts, jobless claims, GDP revision and factory orders today. Canada will release building permits and Ivey PMI.

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