Euro Weakens On Qe Expectations

Euro Weakens On Qe Expectations

The euro has declined against the dollar after growing speculation that the ECB could be ready to take action as soon as this month in order to stave off the threat of deflation.



Euro Weakens On Qe Expectations
Euro Weakens On Qe Expectations

December's harmonized index of consumer prices is released on Friday and is expected to show a year-over-year fall of 0.2%, comments from some ECB officials would appear to lend weight to the argument that the central bank could soon announce further stimulus measures.

Benoît Cœuré, a member of the ECB's six-man Executive Board, was quoted in an interview with German newspaper Die Welt as saying that a programe to buy sovereign debt would not have to be unanimously agreed by the Governing Council and that a decisionby narrow majority would be 'possible and permissible'. When asked if he was optimistic of a decision on buying government bonds being concluded by January 22, he replied that 'Discussions are well advanced. Last week, we discussed lots of technical details. In any case, we will be able to take a decision on 22 January. Which does not mean that we have, in fact, already reached a decision.' EUR/USD sunk 0.48% to 1.1777 by midday in New York, after touching as low as 1.1753 earlier in the session, the lowest level for the currency pair since 2005.

Upbeat start to earnings
The leading US stock indices have bounced back strongly, as Alcoa ($AA) beat estimates with its fourth-quarter earnings, ensuring the earnings season has got off to a good start. Things will become more interesting -- and possibly more challenging -- with the release of results from Schlumberger ($SLB), for an early read on how the energy sector has been impacted by the falling price of oil, but the stock market has clearly taken encouragement from the upbeat first set of results. The Dow Jones rallied 189 points or 1.07% to 17,830 by early afternoon in New York, having earlier soared more than 280 points, while the broader-based S&P 500 climbed 17.6 points or 0.87% to 2045.8.

Job openings in small rise
The domestic macroeconomic calendar was light again today, with the JOLTS report from the Labor Department being the most notable release. The number of job openings increased to 4.972 million on the last day of November, up from 4.830 million at the end of October. Total hires were little changed at 5.0 million in November, while total separations (which includes quits, layoffs and discharges) fell to 4.6 million, though within separations, the quits rate was unchanged at 1.9%. The economic calendar picks up considerably at the end of the week when we have CPI and Industrial Production for December and a first look at Consumer Sentiment for January.


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