The euro rose to 1.1403 (+ 0.25%) against the dollar on October 26, at the end of a week that saw an increase in tensions in the sovereign bond and stock markets, triggered by the massive stock sell-off registered in Wall Street, mainly related to the shares of the hi-tech business companies.
The Governing Council of the European Central Bank is ready to end the quantitative easing program, starting from January 2019, after a progressive reduction of 15 billion a month, starting from October. The Euro zone CPI index rose to + 2.1% in September, against a surge in energy costs, while the fluctuations in underlying prices remained more modest, with core inflation declining to +0.9 %. The Governing Council of the European Central Bank is ready to end the quantitative easing program, starting in January 2019, after a progressive reduction of 15 billion a month, starting in October.
The Euro zone CPI index rose to + 2.1% in September, against a surge in energy costs, while the fluctuations in underlying prices remained more modest, with core inflation declining to +0.9 %. The Governing Council of the European Central Bank is ready to end the quantitative easing program, starting in January 2019, following a progressive reduction of 15 billion a month, starting in October.
The Euro zone CPI index rose to + 2.1% in September, against a surge in energy costs, while the fluctuations in underlying prices remained more modest, with core inflation declining to +0.9 %. Governor Mario Draghi said that the ECB’s Quantitative Easing was “very effective”. Draghi, recognising the recent weakening of the euro area economy, also spoke about what defined a “bunch of uncertainties” linked to trade protectionism, to the risk linked to emerging markets and the volatility of financial markets. He also said that the euro zone monetary union remains “fragile”. The Federal Reserve raised interest rates in the United States by +25 basis points during the FOMC meeting on 26 September last and a further increase is expected for the last FOMC of the year (19 December). After the publication of the latest macroeconomic data that showed the extraordinary increase in the quarterly GDP growth rate, a solid labor market, with the unemployment rate dropped to 3.7% in September, and the rate of inflation still above + 2.0%, at + 2.7% in August, the Fed’s monetary position should become more hawkish.
The Fed’s Kaplan said the “neutral” interest rate for the US economy is between 2.5% and 2.75%, suggesting that the central bank could increase the fed funds another 3/4 times before. According to the COT data referring to the last week of trading, leveraged funds increased their long positions of +3.307 to 30,236 units and strongly increased their short positions of +11.238 to 123.394 units, with a spread of 8.261 (-662 ). The dealers have strongly increased their long positions of +7.788 to 34.236 units and have reduced their short positions of -4.831 to 93.885 with a spread of 10.470 (+4.248), demonstrating to bet on a long-term depreciation of the dollar against euro. The money managers / institutional investors have increased their long positions (+1.211) to 278.532, which are still far from the historical peak of last January, and their short positions (+7.509) have risen to 149.999. spread of 22.090 (-1.362).