Daily Market Report 07/12/12

Draghi’s speech causes markets to shift

Erasing a week’s worth of gains in one fell swoop, the euro tumbled yesterday following an ECB press conference.

With the interest rates and levels of quantitative easing up for discussion, Mario Draghi announced a change in neither, yet the rates fell sharply during his speech. The press conference did however reflect on the euro zone’s poor performance, with a downward revision of the region’s growth prospects sending the euro crashing.

Draghi also announced that the euro zone would keep the interest rates at 0.75%, however comments that his committee was split over whether or not to lower the rate intimated that a future drop could be in order, this too provided downward pressure on the euro.

In comparison Mervyn King’s speech was extremely dull, with little insight into the future movements of the Bank of England, resultantly sterling made no significant moves.

Already this morning, further backlash from the ECB press conference has caused the euro to weaken, whilst the risk aversion has resulted in investors running for cover in the dollar which has consequently strengthened.

Today Draghi speaks once again, though the impact of his words is unlikely to be as strong as yesterday. Manufacturing production in the UK is expected to fall into contraction, whilst German industrial production and US unemployment data are also announcements to look out for.

Today’s Key Announcements:

  • 09.30am – GBP – Manufacturing Production m/m: expected down at -0.2%
  • 09.30am – GBP – Consumer Inflation Expectations
  • 10.00am – EUR – ECB President Mario Draghi Speaks
  • 11.00am – EUR – German Industrial Production m/m:  expected at -0.4%
  • 13.30pm – USD – Non-Farm Employment Change: expected down at 90k
  • 13.30pm – USD – Unemployment Rate: expected to remain at 7.9%
  • 14.55pm – USD – Prelim UoM Consumer Sentiment

 See previous Daily Market Reports