Market News | Amana Capital
Eurozone consumer confidence, according to preliminary January figures from the EU Commission survey, jumped to 1.3, vs consensus expectations of 0.6 and the previous figure of 0.5. This is the highest since 2000, illustrating the region's increasingly-buoyant economy. Meanwhile, EUR/USD has just risen to a 3-working-day high over 1.2285, but its upward move started a few minutes before this release.
The Richmond Fed manufacturing index decreased to +14 in January, versus the unrevised +20 reading seen in December. Overall, downward pressure stemmed from shipments (+15, from +24), the number of employees (+10, from +20) and the average workweek (+2, from +8), partially offset by upward pressure seen from wages (+24, from +22) and an unchanged reading from new orders (+16).
Last October, the ECB announced that it will halve its monthly net asset purchases to €30bn from the start of this year and that these would continue until at least the end of September. It will reinvest maturing assets for an extended period of time, while interest rates will be kept at present levels until “well past” the horizon of net asset purchases. The forward guidance on the asset purchase programme (APP) was left open-ended, so that the option of expanding it by size and/or duration was kept.
Monetary policy is seemingly on a preset course for the first nine months of the year. The December meeting reaffirmed these policy decisions. Financial markets, however, are looking increasingly beyond September. More hawkish members of the ECB Governing Council have called for a signal of an end to the APP after September, rather than to leave it open-ended. Providing such a signal at this stage, however, is still a minority view on the Governing Council and therefore has had limited impact on the euro. Markets, however, reacted to the minutes of the December meeting, released on 11 January, which stated that the ECB will revisit forward guidance “early in the coming year”.
In particular, the ECB is looking to eventually “transition” its forward guidance on APP to broader guidance on monetary policy as a whole, which would enable asset purchases to be wound down, but also allow the ECB to maintain a dovish stance, if needed. The minutes contributed to the rise in the euro to a 3-year high against the US dollar, although this also partly reflects general dollar weakness.
Overall, we do not expect any changes to the ECB’s forward guidance to be announced this week. Instead, the earliest date for any change to its communication is likely to be at the following meeting on 8 March, which takes place after the Italian elections on 4 March. The key focus this Thursday will therefore be on President Draghi’s comments at the press conference at 13:30GMT.
The euro’s most recent ascent and the fact that domestic inflation is still subdued suggest that Mr Draghi is likely to strike a dovish tone and continue to preach ‘patience’. Even though a tapering of bond buying after September is the most likely scenario, the ECB is not ready to commit to that just yet. Nevertheless, with markets likely to ‘look through’ any dovish rhetoric, it remains to be seen whether Mr Draghi can prevent a further tightening of market conditions, which would make it more difficult to achieve the inflation target.
Speaking earlier today, Riksbank Governor Ingves said that a high level of household indebtedness presents a risk to financial stability, and it is important to slow down this development, according to a report from Bloomberg. He referred to the regulatory measures rather than monetary policy tightening as the way to address excessive borrowing. In any case, we expect higher Swedish interest rates later this year for macroeconomic reasons.
Cryptocurrency Daily Update: Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ripple
- Major Cryptocurrencies suffer on series of regulatory warnings
- Entire crypto market is undergoing the tensions from regulatory authorities
- Bitcoin declined again to $10,000 level, Ethereum prices down 13%
- Ripple slid 11% to $1.23, below the physiological level of $1.50
BTC /USD (Bitcoin): Bitcoin suffered by declining over 10% on Tuesday following a series of regulatory warnings that came over the weekend in regions such as Bulgaria and Bali. After plunging to 4 digits on last Wednesday, the most popular cryptocurrency price is back to $10,000. The market capitalization of bitcoin fell to 175.95 billion, down from to 198.32 a day before. At 11:20GMT, it was trading 12% lower at $10,305.
ETH/USD (Ethereum): Following bitcoin, the world’s second-largest cryptocurrency in terms of market cap, Ethereum, also moved below the physiological level of $1,000 on the Bitfinex exchange after sinking to $770.10 last week. At 11:20GMT, it was trading 13% lower at $936.26.
BCH/USD (Bitcoin Cash): All major cryptocurrencies are in the red today. Right now, the Bitcoin cash remained lower, but managed to trade above $1,500 after succumbing to the dip of 1,345.6 last week. However, the entire crypto market is undergoing the tensions from regulatory authorities and that has poisoned investors’ sentiments throughout all bourses. At 11:20GMT, it was trading 13% lower at $1,530.2.
LTC/USD (Litecoin): Following the other cryptocurrencies, Litecoin also pushed lower, but remained above the last week low of $147. At 11:20GMT, it was trading 12.3% lower at $169.13.
XRP/USD (Ripple): The third most popular cryptocurrency, the ripple is back below the physiological level of $1.50 level after witnessing parity last week. The digital currency started the week on a softer note. At 11:20GMT, it was trading 11% lower at $1.23400.
The partial shutdown of the US government appears likely to end soon. Senate Democrats agreed to vote in favor of a short-term Continuing Resolution (CR) to fund the government through February 8 in return for a promise to consider immigration legislation during the period.
The Senate has proceeded with a temporary spending bill having an 81-18 vote proportion, although it still needs to vote on the final passage of the CR.