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Currency Market Analysis

Dec 14, 2018 | Currency Market Analysis

Global Themes

Euro slips as ECB warns on growth

The euro was weaker overnight hit by increasing pessimism overnight with both the European Central Bank and the Swiss National Bank downgrading forecast for growth.

The ECB was the main focus as it confirmed it would end its four-year long money printing program and the end of the month.

However, the ECB noted growth risks were now pointing to the downside and indicated it would continue to reinvest maturing bonds for some time in a move that extends some of the benefits of the central bank’s quantitative easing program.

Slipping

The USD was also weaker overnight as markets look ahead to next week’s Federal Reserve decision.

The British pound weakened as markets cooled their enthusiasm after this week’s confidence win for UK PM Theresa May.

Eye on China

The market focus shifts to Chinese with key industrial production and retail sales numbers due.

Chinese economic activity has slowed this year with office growth numbers slipping towards ten-year lows.

Next week, markets will be prepared for a step-up in volatility with a critical Federal Reserve meeting due on Thursday.

If the Fed shifts its forecasts in line with other central banks, the USD could close the year with fireworks.


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