ECB to nudge up growth forecasts but inflation a drag
- Author: Zachary Reyes Jun 08, 2017,
Jun 08, 2017, 23:41
The ECB monetary policy measures have continued to preserve the very favorable financing conditions that are necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2 percent over the medium term, according to the ECB president.
The dollar stayed near its seven-month low against a basket of currencies as doubts over Trump's ability to push through his stimulus plans have eroded the greenback's gains made late a year ago. Euro zone stocks rose as much as 0.6 percent as signs emerged of another bank rescue, this time in Italy, and data showed the bloc growing at its fastest since the ECB started printing money.
The pound climbed Wednesday on the eve of the British general election, while European equities dipped ahead of a busy news day that will include an interest rate call in the eurozone and vital testimony from sacked Federal Bureau of Investigation chief James Comey in the United States. Comey was abruptly fired by President Donald Trump in May.
"If the conservatives win big, that will lead to a big relief in markets and buy-back in the pound".
Against the yen, the dollar bounced back a tad to 109.74 yen JPY= from Wednesday's 1-1/2-month low of 109.115.
June's economic forecasts from European Central Bank staff are expected to show lower inflation expectations than previously, lending support to governing council members who want to stay the course. In the year to May, inflation slowed to an annual rate of 1.4 percent.
As for the United Kingdom, for all the scenarios of a hung parliament or Labour-led coalition, the central assumption is for a slightly increased majority for the ruling Conservatives and averaging the very diverse opinion poll projections points to the same.
The euro has risen against the dollar in the past five months, partly due to the greenback's weakness, but also on the view that rising inflation would prompt the European Central Bank to raise interest rates in early 2018. Euro area real GDP increased by 0.6%, quarter on quarter, in the first quarter of 2017, after 0.5% in the last quarter of 2016.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS crept up 0.1 percent, with Hong Kong and mainland China stocks leading the region higher.
USA 30-year bonds fell 16/32 in price, yielding 2.835 percent, compared with Tuesday's 2.81 percent. "We still expect a compromise to be reached, implying more QE into next year, but at a reduced monthly pace", economists at Societe Generale said in a note. The main refinancing rate was left unchanged as well, at 0.0%.
Spot gold was down 0.6 percent at $1,285.17 an ounce by 3:34 p.m. EDT (1934 GMT).
Eurostar said on Thursday (2 March) that eurozone inflation surged to a four-year high in January, surpassing the European Central Bank's target of below, but close to 2% thanks to its monetary stimulus. USA gold futures slipped to settle at $1,293.2.
Volatile food and energy prices are to blame for such rapid changes, policymakers say, while "core", or underlying inflation discounting those elements remains sluggish. USA benchmark futures have slid more than 11 percent in 10 days of trading. Brent crude, used to price Global oils, rose 14 cents to $48.20 per barrel in London.