Global markets mood upbeat after ECB and rate cut by PBoC – Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 26, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Piotr Matys, EM FX Strategist at Rabobank, suggests that the global stocks ended last week in a very positive mood after ECB President Draghi boosted expectations for more monetary policy stimulus in the Eurozone and the People’s Bank of China cut interest rates to prevent a sharp slowdown in economic activity.

    Key Quotes

    “Fairly dovish comments from Draghi last Thursday not only implied that the ECB is very likely to expand/extend its asset purchase program at the next meeting schedule for December 3, but also that the deposit rate may be trimmed as well, as outlined by Rabobank ECB watcher Elwin de Groot in his report.”

    “On Friday market sentiment improved even further after the PBoC eased monetary policy to support sluggish (for China that is) GDP growth, which slowed from 7.0% y/y in Q2 to 6.9% y/y in Q3. The Bank cut its one-year lending rate to 4.35% from 4.60% and also lowered by 50bps the reserve requirements to boost liquidity amid ongoing capital outflows.”

    “While the initial market reaction was positive, such measures could be also interpreted as sign of desperation amongst Chinese officials who will meet in Beijing this week to work on a long-term economic plan with a focus on structural changes.”
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