BoE Hints At Zero Interest Rates

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Muted QE Weighs in on the Greenback

A tough day on wall street ensued as another slide in the technology sector helped pull indices lower.

The ripple effects of the recent FOMC meeting were still filtering through as no further signs of fiscal stimulus were evident.

All three major indices fell over 1% in the worst trading session in a week.

The US Index was initially buoyed in the early session on Thursday as US jobless claims declined from the previous month.

However, this could not stop the index closing 0.29% lower as weak housing data dragged levels below the 93 handle.  

ECB Adds Another Round of Relief

The euro ended 0.28% higher yesterday but fell short of another attempt at the 1.19 area.

The ECB confirmed the easing of regulations for major eurozone banks which will free up as much as €73bn of capital. This is a further attempt to boost lending and prevent the pandemic from halting economic progression.

Brexit Divorce Does Not have to Turn Ugly

The pound ended the session indecisively just below the 1.30 psychological mark on Thursday.

Uncertainty remained as the BoE indicated that they were not ruling out dropping interest rates below zero next year. This comes as the central bank left interest rates on hold at a record low of 0.1%.

The president of the European Commission stated that she was convinced a trade deal could be met with the UK.

Talks are ongoing as Ms. Von der Leyen declared the UK was destroying its reputation, as the UK government plans to amend part of the Brexit withdrawal bill.

Gold Looking to Rebound

Gold was also another casualty of the Fed, as profit-takers led the yellow metal to close 0.80% lower.

Wednesday’s initial reaction to the Fed meeting pushed the dollar higher, however, risk appetite soon shifted as the sell-off began.

Will risk assets benefit from lower interest rates anytime soon?

Oil Makes Weekly Progression

WTI closed 1.94% up yesterday, capping off a 5-day winning streak.

The psychological $41 handle was achieved as oil demand remains at low levels. Projections from OPEC and the IEA are getting worse, not better.

There was a hint of exhaustion as US Gulf Coast producers start to get back online after a devastating and slow-moving Hurricane Sally.



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