ECB's President did acknowledge incoming data signalled some moderation of the economy but still maintained that risks to the outlook were broadly balanced. The Euro was choppy during the press conference but has since moved to the downside alongside Euro Zone government bond yields.
European equities have advanced meanwhile while Wall Street has also added to opening gains with technology shares showing notable outperformance. On the data front, US durable goods were flat MoM in March (ex. transport) versus estimates for a +0.5% gain, initial jobless claims slowed to 209K (f/c. 230K) from 233K and the advance goods trade deficit narrowed to -$68.4 Bln (f/c. -$74.80 Bln).
Elsewhere in FX, the Dollar has advanced against all of its G10 rivals while the Swedish Krona remains at the bottom of the pile after a dovish message from the ECB.
Oil has also been volatile with US crude futures moving off the lows in recent trade to add around 0.5%. Still to come today, a $28.0 Bln 7-year note auction at 18:00 BST.
* US Corporate News:
– General Motors (-2.1%): Q1 EPS $1.43 versus $1.28 expected | Revenue $36.1 Bln versus $34.6 Bln expected
– Pepsico (+2.5%): Q1 EPS $0.96 versus $0.93 expected | Revenue $12.6 Bln versus $12.4 Bln expected
– ConocoPhillips (+2.2%): Q1 EPS $0.96 versus $0.74 expected
– UPS (-1.1%): Q1 EPS $1.55 versus $1.55 expected | Revenue $17.1 Bln versus $16.4 Bln expected
* Chinese Premier Li said they are open to negotiations with the US on trade.
* Five Star leader Di Maio said fresh elections should be held if talks fail.
* ECB ‘Monetary Policy Decisions:
– Main policy rates on hold as expected
– Rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.
– Asset purchases to continue at a monthly pace of €30 Bln until the end of September 2018, or beyond, if necessary
* ECB Press Conference – Introductory Statement (President Mario Draghi):
– Incoming information since our March meeting points towards some moderation, while remaining consistent with a solid and broad-based expansion of the euro area economy
– The underlying strength of the euro area economy continues to support our confidence that inflation will converge toward our inflation aim of below but close to 2% over the medium term
– Underlying inflation remains subdued and has yet to show convincing signs of a sustained upward trend
– An ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up
– The risks surrounding the euro area growth outlook remain broadly balanced, but risks related to global factors, including the threat of increased protectionism, have become more prominent
* ECB Press Conference – Q&A (President Mario Draghi):
– Some normalisation was expected, mostly due to temporary factors, for example cold weather, strikes, timing of Easter.
– The bottom line is caution tempered by unchanged confidence in the convergence of inflation toward our overall aim
– ‘Steady hand was discussed’; words we use are patience, prudence and persistence
– We did not discuss FX volatility
– We have not discussed future policy
– We did not discuss monetary policy per se
* US Durables Goods Data (Mar P):
– Durable Goods Orders M/M +2.6% versus +1.6% expected, previous +3.0% revised to +3.5%
– Ex. Transport M/M 0.0% versus +0.5% expected, previous +1.0% revised to +0.9%
* US Advance Goods Trade Balance (Mar) -$68.04 Bln versus -$74.80 Bln expected, previous -$75.88 Bln
* US Wholesale Inventories M/M (Mar P) +0.5% versus +0.6% expected, previous +1.0%
* US Initial Jobless Claims +209K versus +230K expected, previous +232K revised to +233K
* White House Economic Adviser Kudlow said he has hopes for talks with China, adding that they want China to lower tariffs and open markets.
* Kansas City Fed Manufacturing Activity Index (Apr) 26 versus 17 expected, previous 17
* Spokesman for UK PM May said the UK is categorically leaving the customs union.
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