Adam Button breaks down recent ECB and BoC moves.
The euro (EUR) and British pound (GBP) are neck-and-neck on the ascent after the European Central Bank stuck kept their bond purchases the same under the pandemic bond purchase program.
U.S. jobless fell to 1.3 million, a new three-month low. U.S. bank earnings were mixed, with Bank of America (BAC) down after falling profits, while Morgan Stanley (MS) rose on record-breaking revenue and earnings.
Ashraf Laidi is watching crude oil as it scrapes the top of the March 9 gap; a close above $41.60 would help trigger the next leg down in the U.S. dollar (see chart below). All major U.S. stock indices are down, led by Nasdaq (-1.6%) as Twitter slumped after the hacking of the accounts of some prominent public.
The Bank of Canada introduced a dovish style of forward guidance on Wednesday, but the currency market cheered it. The Canadian dollar (CAD) is now mixed today against the FX pack. The BoC delivered a mild surprise with a comment to "hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved." BoC Governor Tiff Macklem made it clear that wouldn't be until the output gap was closed, which won't be until 2022 at the earliest.
It's early in the Covid-19 world but don't rule out a change in the reaction function of markets. Rate differentials are a dead trade for now with everything in developed markets pinned to the lower bound; so, the investing playbook is about certainty and growth-positive policies.
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