European Central Bank eyed after Fed raises rates

Drama Over?       Italian two-year yields though not back to pre-crisis levels are much lower than in late May

Drama Over? Italian two-year yields though not back to pre-crisis levels are much lower than in late May

After the European Central Bank's board meeting in Riga on Thursday, Draghi made clear than nothing will change this summer and the bond-buying programme will continue until December.

The euro's 5 percent fall against the dollar since April is also helping the European Central Bank as the weaker currency is increasing the cost of imports and boosting inflation.

In the May statement, however, the United States central bank said that "economic activity has been rising at a moderate rate".

Many markets in Asia, including Singapore and Kuala Lumpur, were closed yesterday for holidays celebrating the end of Ramadan.

In the medium term; investors now hold the U.S. economy in very high regard, and given claims that the central bank is aiming for 2 more rate rises this year, we could see the "Greenback" climb in the coming months.

The New Zealand dollar rose against a broadly weaker euro after the European Central Bank said it may not hike interest rates until late 2019 while stronger U.S. retail sales data also helped lift the greenback.

The statement also said its interest rates would not rise until at least summer 2019.

"The Fed, barring any unexpected financial market calamity, is primed to raise interest rates every quarter while the European Central Bank will continue to sit on their hands well into 2019".

It revised annual inflation forecast notably up for 2018 and 2019, namely to 1.7 percent for both years, basically meeting ECB's policy aim - below but close to 2 percent in the medium term.

"The ECB has laid the foundations to begin normalisation next year but the process will be very gradual given below target inflation and current geopolitical uncertainties", ANZ economists said.

The Dow Jones Industrial Average fell 49.71 points, or 0.2 percent, to 25,151.49, but the S&P 500 gained 4.48 points, or 0.16 percent, to 2,780.11 and the Nasdaq Composite added 50.68 points, or 0.66 percent, to 7,746.38.

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 effects were more measured in the US, where Wall Street indexes were creeping up, stabilized too by a US Commerce Department report showing retail sales rose 0.8 percent last month, the biggest advance since November 2017.

Another concern for policymakers will be the arrival of a new coalition government in Italy and it will be keen for its stimulus programme to not be seen as enabling the government's controversial spending plans.

Central banks put a range of quantitative easing programs into action following the global financial crisis.

Oil prices fell as investors eyed a key OPEC meeting in Vienna.

USA 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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