27/10/2017 - ECB Prolongs Bond Buying Programme By 9-Months

EUR

The ECB prolonged its bond buying programme by nine months to September 2018, and left the door open to keep buying after that. It said it would begin paring its monthly purchases by half to 30 billion euros ($34.90 billion) starting in January. ECB chief Mario Draghi said “an ample degree of monetary stimulus remains necessary”, as inflation has yet to show signs of a sustained upward trend.

From January of next year The European Central Bank will reduce the amount of assets it buys every month to €30bn from the current level of €60bn. The programme, which aimed to fend off the threat of eurozone deflation and help boost employment, could finish by the end of next year.

Inflation is likely to be below the 2% ECB target for the next few years. The recovery in the eurozone is gaining momentum, so the ECB has opted to reduce some of its stimulus.The ECB kept the key interest rate for the countries that use the euro unchanged at 0%, and its deposit rate at -0.4%.

USD

The number of Americans filing for unemployment benefits increased by less than expected last week, suggesting the labour market continued to tighten after recent hurricane-related disruptions. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 233,000 for the week ended Oct. 21, the Labour Department said. Claims fell to 223,000 in the prior week, which was the lowest level since March 1973.

Initial jobless claims   have declined from the almost three-year high of 298,000 hit at the start of September in the aftermath of Hurricanes Harvey and Irma, which ravaged parts of Texas and Florida.

The impact of Harvey and Irma has largely dropped out of the claims data for the mainland United States. But Irma and Hurricane Maria continue to impact claims for the Virgin Islands and Puerto Rico, now virtually isolated because of the destruction of infrastructure due to the storms.

Key Announcements

13:30 - USD - US Preliminary GDP; forecast to come out 2.6% against previous of 3.1%