Summary:

• ECB reveal plans to taper APP by year-end; Draghi strikes dovish tones
• Strong selling in Euro and DE30 rallies strongly higher in reaction
• USD on the rise following retail sales beat
• GBP volatile after UK consumer spending picks up
• Crypto looks to recover after recent rout

There were some major moves this afternoon after the ECB unveiled their plans for tapering off their Asset Purchase Programme by year-end. All major rates were kept unchanged as was widely expected, and a comment in the accompanying statement that this will be the case until at least the summer of 2019 sewed the seed for a dovish market reaction. 

Draghi’s press conference that followed hammered home the dovish feeling with remarks that the decision was unanimous and caution about Q2 performance in some countries giving off the distinct impression that the exit from this unorthodox policy will be very slow and measured. 

The EURUSD dropped over 200 pips from its high of the day in an indication of how wrong footed the market was by this and some strong US data contributed, albeit to a lesser extent to the decline. Retail sales beat with the M/M reading for the headline rising by 0.8% (0.4% exp and 0.4% prior – revised up from 0.3%) as well as the core figure up to 0.9% (vs 0.5% exp and 0.4% prior – also revised higher from 0.3%).

 UK retail sales surged in May beating expectations provided by economists surveyed by Bloomberg as the royal wedding together with warm weather encouraged Britons to go shopping. The pound soared immediately after the release being the best major currency in late morning trading. These gains were handed back when the US equivalent also came in strong but the pound remains firmly higher on the day against the Euro. 

Crypto markets are higher today after some pretty major recent losses with Litecoin the best performer and up by 3%. Earlier this month we wrote about Steve Wozniak, one of the Apple co-founders, who said that in his opinion there is no way Bitcoin will become global currency. Recently Brad Garlinghouse, CEO of Ripple, also expressed that he does not believe that it will happen while provide some interesting arguments why.