Summary:
- ECB keep all rates unchanged as widely expected
- Draghi press conference errs on the dovish side and weighs on the Euro
- BoE also stand pat; GBP recovers after a dip to end the afternoon higher
- European manufacturing PMIs beat forecasts
- US and UK retail sales impress boosted by Black Friday
- NOK jumps on more hawkish Norges Bank
- Bitcoin pulls back a little as Ripple surges higher
This week sees the final rate decisions of the year from several of the major central banks with today seeing both the ECB and BoE meetings conclude. The ECB wasn’t expected to do much after announcing a QE extension only recently, and true to form they kept all monetary policy tools unchanged.
The Draghi press conference is often seen as the main market moving event around ECB decisions and this proved to be the case today, even if the ECB president did refrain from any fireworks. A cautious tone that erred on the side of being dovish has weighed on the Euro since then, with the single currency falling against most of its peers.
The Bank of England also stood pat and kept their policy unchanged with a unanimous 9-0 vote. A line from the statement which stated that they believed inflation to be close to peaking saw a move lower in the pound but as the afternoon wore on it recovered and trades higher against all it peers barring the Aussie on the European close.
The AUD is the best performer in the G10 space today, receiving a boost overnight from an upbeat jobs report. Not only did the employment change beat forecasts and the prior reading receive an upwards revision but an increase in the participation rate was another boon on an already solid report.
Based on December PMIs coming from the major European economies one may say that the economic improvement keeps going and there are no signs suggesting that the trend could lose its steam in the foreseeable future.
It’s a busy day of economic releases with the main one from the US the latest retail sales figures. For the month of November – which includes the shopping bonanza Black Friday – retail sales for the US rose by 0.8% against consensus expectations for a 0.3% increase.
The last print from the UK economy scheduled for this week strongly surprised to the upside. The November retail sales numbers beat expectations by a large margin and this is a positive sign for the GBP (at least in the short term) as the British economy is heavily dependent on domestic consumption.
A perceived hawkish shift from the central bank of Norway has boosted the Krone. Taking a closer look into the statement of the Norges Bank one may notice that a jump seen in the Norwegian krone seems to be entirely justified.
Bitcoin is on course for a small daily decline of around 2% with the market leader in crypto space pulling back a little after the incredible run higher seen of late. Today all other crypto markets are a little lower apart from Ripple which has added to its tremendous run. Ripple is up by another 40% on the day and news that Ripple-based payments systems are due to be tested by Asian banks is exciting the bulls on the hope of a more widespread adoption.