While the market was waiting for the ECB to be out of the way, the real news continues to be Germany's willingness to keep the purse strings open, with Merkel getting further stimulus approved yesterday & furthermore, hopes of closer fiscal union between the whole of the EU still alive. The UK was one of the main forces standing in the way of closer fiscal union; just perhaps, the UK leaving strengthened rather than weakened the Euro, at least for the next few years.
In saying that, this initial move has been significant and has potential for a heavy pullback, particularly if the US gets its act together. However, just while Europe is completing its re-opening, with reports from Scandinavia that life is 'back to normal,' areas of the US are seeing jumps in COVID cases again. While COVID numbers haven't been the thing to watch for a while, US numbers need to be kept an eye on over the next few weeks.
Following the European Central Bank's (ECB) decision to expand its Pandemic Emergency Purchase Programme (PEPP) by €600 billion to €1,350 billion, Christine Lagarde, President of the ECB, is delivering her remarks on the monetary policy outlook in a press conference.
Todays ECB bullet points:
• ECB still faces risks of fragmentation.
• ECB capital key is benchmark for purchase programs.
• PEPP operations will continue to operate flexibly.
COPPER: POP OR DROP?
Similar to other instruments, Copper has almost retraced its full March drop. Today was weak & failed to make a new high at the key 2.5 area.
With weekend risk ahead, there are a few signs that a retracement in risk is on the cards in to FOMC next week. If Copper drops lower early tomorrow, long Yen starts to look more attractive.