However, the focus of the session was on ECB interest rate decision and the following Press Conference. The 25-member Governing Council, meeting in Frankfurt on Thursday, reduced the rate by 10 basis points to minus 0.3 percent. That’s in line with the move forecast by economists. Policy makers left the main refinancing rate and the marginal lending rate unchanged. On the following Press Conference, ECB President Mario Draghi said that the ECB extends the asset purchase programme to run until March 2017 or beyond if necessary and in any case until the Governing Council sees an improvement in inflation.
The ECB decided to reinvest the principal of assets bought under QE. It will also include local government bonds in QE. It also also announced it will continue conducting the MROs and 3-month LTROs as fixed rate procedures with full allotment as long as necessary.The prospects for growth are broadly unchanged since September, however ECB now sees HICP inflation at 0.1 per cent in 2015, 1 per cent in 2016 and 1.6 per cent in 2017. The outlook for HICP inflation has been revised downwards slightly.
In the US session Unemployment Claims and Non-Manufacturing PMI figures were released. In the week ending November 28, the advance figure for seasonally adjusted initial claims was 269,000, an increase of 9,000 from the previous week's unrevised level of 260,000. This was in line with market expectations. The 4-week moving average was 269,250, a decrease of 1,750 from the previous week's unrevised average of 271,000.
The Non-Manufacturing PMI registered 55.9 percent in November, 3.2 percentage points lower than the October reading of 59.1 percent. Analysts were anticipating decline to 58.1. This represents continued growth in the non-manufacturing sector at a slower rate. According to the NMI, 12 non-manufacturing industries reported growth in November. After a strong month of growth in October, the non-manufacturing sector’s rate of growth slowed in November. Most respondents are still positive about business conditions.
There will be no major data releases from Eurozone tomorrow, but traders will be influenced by latest ECB stanzas, so we do not expect less volatile European part of the session. Focus of the US session will be on NFP and Trade Balance figures. Analysts are forecasting increase by 201,000 in number of employed, while Unemployment Rate should remain unchanged at 5.0%. Trade Balance deficit should slightly narrow to $40.6 billion.
Figures to watch:
Non-Farm Employment Change/Unemployment Rate (Friday 14:30)
Trade Balance (Friday 14:30)
