Markets have been relatively steady on Monday with the US$ holding a mostly bid bias as traders looks towards Thursday’s ECB Meeting. The most interesting action was in the Yen, which saw the dollar trade at three-month highs as traders expect the BOJ to continue its loose monetary policy measures after Japanese PM Abe won the snap election. In other markets, US stocks are a little lower after making yet new all time highs. The metals are rangebound, as is WTI.
Tuesday’s focus will be almost entirely on the global flash PMIs and it would note really surprise if markets hold close to current levels which waiting on Thursday’s ECB decision. It appears that the general consensus is that the ECB will announce a 9 month extension of the APP at a reduced pace of EUR30bn per month compared to the current 60 bio pm. Also of note this week is the likely announcement of the next Chair of the Fed, which should produce a decent reaction, one way or the other, in the dollar. I think if Yellen is reappointed there will be some disappointment at the lack of change and possibly a selloff in the dollar. The other leading candidates, Taylor/Warsh, seem more hawkish and would see a decent bounce in the dollar and bond yields, I suspect.
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|ASX SPI: 5866|