Market News & Analysis
Market Brief: Trade-fixated markets shrug off historic ECB non-event
Ken Odeluga December 12, 2019 11:36 PM
Stock market snapshot as of [12/12/2019 3:20 pm]
- Trade matters, or at least the lack of fresh bad news on them, have eclipsed the ECB’s first policy update under president Christine Lagarde. Risk assets are also maintaining a post-Fed updraft. After a brief dip into the red during the ECB’s press conference, European stock markets have resumed a positive tilt and Wall Street also drifted back higher after futures faded a threatened decline
- To be sure, the ECB didn’t offer much that was concrete to react to. The statement was largely identical to the prior one. The year’s inflation forecast edged down to 1.1%; 2020’s edged up to 1.2%. 2019’s growth outlook is unchanged; 2020’s dips to 1% from 1.1%
- The euro did perk up a tad on Lagarde’s press conference comment on signs of an underlying inflation revival, but short-term rate markets were deadpan. Neither dove nor hawk, Lagarde is a self-described “owl”. She confirmed that an ECB strategic review will begin in January
- The FOMC policy statement was similarly uneventful. The most notable takeaways from the Fed events include that policy makers are more resolute in leaving policy alone for all of 2020, amid a “favourable” outlook despite risks. Also, that chair Jerome Powell is considering expanding “not QE” short-term asset buying to include coupon-bearing securities
- Friday, when results of Britain’s general election will be known, still looks to be the day when cross-asset volatility may be most in evidence (though it is most likely to be visible in sterling)
- The pound is making a show of reacting to the rather disparate final polls published whilst mandatory reporting restrictions apply. The Tories will either secure a slightly smaller 44% vote share vs. Labour’s a-bit-higher 33%, or as little as 41% vs. 36%, depending on which poll proves to be accurate, if any
FX snapshot as of [12/12/2019 3:24 pm]
View our guide on how to interpret the FX Dashboard
FX markets and gold
- GBP/USD swept liquidity out from probable stops near this week’s earlier $1.3215 highs. The rate than marked a fresh near 9-month top at $1.3228 before retreating to as low as $1.3115 and then drifting to $1.3174
- Short-term options trading is tight and active. Premiums are elevated with a bias favouring puts. Price action is entirely consistent with that assessment. As such, there’s little point in reading much into price moves before the first hint of an election outcome emerges from early ‘exit polls’ soon after 10 pm GMT
- Elsewhere, the dollar remains under light pressure, though erased an Asia-session decline. 10-year Treasury yields were up 8 basis points to about 1.87% after falling 5bp a day ago
- Aussie was reportedly supported by exporters. AUD/USD is close to its 200-day average as the possible 15th December tariff rise looms. The risk that it could go through and clear some stops isn’t easy to call
- The SNB’s reiterated intervention threat hasn’t exactly echoed. USD/CHF was last at 0.98620. The new winter low is 0.98088
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.