• Asian session review: The euro fell continuing yesterday's decline

Market news

21 October 2016

Asian session review: The euro fell continuing yesterday's decline

The euro fell, extending yesterday's decline after the ECB meeting. ECB left its key rate unchanged at a record low of 0%, which corresponded to the expectations. Central Bank President Mario Draghi at the press conference signaled that the bond purchase program may be continued after March 2017, but has not announced a clear intention to do so.

The US dollar rose against major currencies amid growing investor confidence in a Fed hike. According to experts, the strong economic data and comments by Fed officials support the expectations of higher interest rates in December. On Wednesday evening, William Dudley said that the central bank may be able to raise interest rates by year end. Earlier this week, the same comments made by the Vice-Chairman Stanley Fischer. According to Fed funds futures the probability of a hike in December is 74% vs 69.5% earlier this week.

Also today, Haruhiko Kuroda said that the central bank may temper the optimistic forecasts next year. This indicates a continuous struggle to complete a deflationary cycle. "We are already in the middle of the fiscal year, but inflation is still in negative territory," - said Kuroda in the Parliament when discussing consumer prices, taking into account energy. According to him, the central bank may revise its forecast that core inflation will reach 2% in 2017 fiscal year.

EUR / USD: during the Asian session the pair fell to $ 1.0895


GBP / USD: during the Asian session the pair fell to $ 1.2225


USD / JPY: during the Asian session, the pair rose to Y104.20

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