Published: Sun, June 17, 2018
Markets | By Josh Butler

European Central Bank to reduce volume of bonds under asset purchase programme

European Central Bank to reduce volume of bonds under asset purchase programme

Eyes are now on the European Central Bank, which is discussing Thursday when it might end its stimulus program.

"The dollar-yen certainly tends to be a little negatively impacted by increasing concerns about a trade war", he said. The euro's drop pulled the dollar higher with the index up 0.1 per cent on the day at 93.81.

Attention quickly turns to the main event in the markets today, which will undoubtedly be the meeting of the European Central Bank in Latvia.

In a rare merging of the sports and trading worlds, markets are gearing up for soccer's World Cup in Russian Federation, where time zone differences mean more matches during European, US and Latin American trading hours than any previous tournament.

The ECB's bond buys - now set at €30 billion ($35 billion) a month - and ultra-low interest rates are created to stoke growth in the 19-nation single currency area and power inflation to the bank's target of just below 2 percent.

The US dollar rose against a basket of major currencies by more than a penny as the euro cratered, and US stocks ticked up in afternoon trading on Thursday, as the European Central Bank signaled interest rate hikes were a long way off. U.S. President Donald Trump was planning to meet with trade advisers later to decide whether to activate the tariffs, a senior administration official said on Wednesday.

The ECB sent the euro, the Australian dollar and emerging market currencies tumbling after it signalled the eurozone recovery was not almost as strong as everyone thought and that interest rates there were not expected to rise until late next year.

Trump, whose hardline stance on trade has seen him wrangle with allies, said in a statement a 25 percent tariff would be imposed on a list of strategically key imports from China. He added that longer-term inflation expectations were "well anchored" towards the bank's target of just below 2%.

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The Dow Jones industrial average closed 0.1% lower on Thursday.

Bank of Japan head Haruhiko Kuroda meanwhile on Friday defended his bank's decision to press ahead with the country's ultra-loose monetary policy.

The pan-European Stoxx 600 index ended 1.2 per cent higher as the Xetra Dax in Frankfurt jumped 1.7 per cent and the FTSE 100 in London gained 0.8 per cent.

The bank's bond-buying stimulus programme, also known as "quantitative easing" (QE) is credited with having helped the eurozone economy to recover from the region's financial crisis.

The federal reserve raised the interest rates, to sort out the facts for an inflation and the employment rate is a very good stature.

Oil prices were down, facing pressure from evidence of rising USA output and uncertainty over supply, before a meeting next week of the world's largest exporters.

United States crude oil futures settled at 66.89 per barrel, up 0.38 percent, while Brent went the other way, settling down more than 1 percent at $75.94.

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