|09-07-2014, 02:27 AM||#1|
ECB dovish monetary moves rock markets, US jobs report disappoints
Global financial markets were caught by surprise last week, with the ECB taking a bearish view and cutting the rate by 10 basis points to 0.05. Immediately following this announcement the Euro fell to the lowest rate witnessed in more than a year against the U.S. dollar
ECB policymakers on Thursday cut interest rates to 0.05 percent from 0.15 percent and the deposit rate to minus 0.2 percent from minus 0.1 percent, meaning lenders would have to pay more to keep their cash at the central bank.
The even stronger medicine from ECB President Mario Draghi will also see the central bank start a new stimulus program buying asset-backed securities (ABS).
In another surprising event last week, U.S. job creation slowed to its lowest pace of the year in August, a stumbled for the labor market that had seen a stretch of steady 200,000-plus gains over the past six months.
The U.S. jobs data showed non-farm payrolls grew by 142,000, well below expectations, while the jobless rate edged down to 6.1 percent.
Elsewhere, as anticipated markets saw no change in the Bank of England interest rate and asset purchase decision, with rates being kept at 0.5 percent and asset purchases remaining at £375 billion.
Markets will be closely watching the upcoming BoE minutes release. It will be interesting to see if the two members from the last meeting are still voting for an interest rate hike, or if more members have followed suit or if they have retracted their vote all together.
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