Daily Market Report - 23/10/2015

The Euro lost significant ground yesterday afternoon after the European Central Bank (ECB) President Mario Draghi said he was studying new stimulus measures that could be unveiled as soon as December and is prepared to cut its deposit rate deeper into negative territory if needed to fight falling prices. Consumer prices in the 19-country Euro-zone slipped by 0.1 percent in September, prompting calls for the ECB to expand or extend its 60 billion euros a month quantitative easing program that was designed to push inflation back to the ECB's target of just under 2 percent.

ECB chief Mario Draghi said falling inflation expectations, driven in part by lower-than-expected demand for oil, has led the central bank to consider a wide variety of possible measures, including a deposit rate cut, to shore up inflation.

The Pound gained across the board yesterday morning after the UK’s retail sales rose in September at their fastest monthly pace in almost two years as shoppers with more cash in their pockets bought beers to toast the Rugby World Cup, the first held in Britain since 1999. Retail sales volumes surged last month by 1.9 percent exceeded all expectations and marked a break with disappointing data from the previous two months.  Consumers, a key engine of Britain's economic recovery, are benefiting from a pick-up in wages, falling prices for goods in stores and record-low interest rates that markets do not expect to rise before late next year.

The Dollar was boosted by another strong jobs figure after the number of Americans claiming unemployment benefits fell to 259k last week hovering around 42-year lows. The strong jobs figure accompanied with the home resales figure points at solid domestic fundamentals even as the global economy falters. 

Key Announcements
08:00 – EUR – French flash manufacturing is forecast to decline
08:30 – EUR – German flash manufacturing is forecast to decline