The past week has been marked by the January meeting of the European Central Bank.
On the eve of the meeting, the euro dollar exchange rate returned above the three-year highs.
The continuous selling pressure on the dollar allowed EUR / USD to return to 1,2335 level.
The news that was released after was the one in which the European Central Bank left the rates unchanged, confirming all the market forecasts.
The interest rates therefore remained at 0,00% and the deposit rate did not move from -0,40% decided in March 2016.
The expected press conference following the rate decision found a Mario Draghi decided to continue the Quantitative Easing program at a rate of 30 billion per month until September 2018 and even further if necessary. However, the ECB has not completely eliminated the hypothesis of a new intervention.
The ECB’s optimism about the achievement of the 2% inflation target emerged from the press conference, thanks also to the latest data on growth and real GDP which grew of 0,7% on a quarterly basis in the third quarter of 2017.
Draghi also said he saw little chance of a rate hike in 2018.
During the press conference the euro dollar exchange rate took flight and exceeded 1,25, a new maximum of three years.
About the euro, however, Mario Draghi invites investors to understand the real reasons that led to the appreciation and reiterated the fact that EUR / USD fluctuations are ‘natural’ when compared with growth data.
The president of the European Central Bank also warned about the performance of oil prices, which could continue to influence consumer prices.
In fact, on January 25th, the day of the ECB conference, the price of oil flew above $71 a barrel, returning to the autumn 2014 levels.
The current rally of the crude oil prices was the increasingly sell-off on the dollar, accentuated by the same officials of the US administration. President Trump’s Treasury Secretary, at the World Economic Forum in Davos, called the decline of the US currency as ‘positive’ because it will be a benefit in terms of trade and opportunities.
To this statement, the whole market reacted and it was not just the price of oil that reacted to the decline in the greenback. Even the price of gold, has come very close to the coveted threshold of $ 1.360.
As the euro gained and the dollar lost ground, the US fourth quarter GDP data added meat to the fire. The preliminary GDP disappointed expectations, recording a 2,6% that deviated from the 3,0% forecasted by analysts.
The Preliminary GDP price index, on the other hand, increased by 2,4%, confirming neither the previous data at 2,1% nor the analysts’ expectations at 2,3%.
The trade balance of goods then registered a deterioration from -69,99 billion dollars to -71,58 billion.
Next week will be the turn of the Federal Reserve and its January meeting to talk about interest rates. There will be, however, other important market movers scheduled on the economic calendar from the US Non Farm Payrolls released at the end of the week to the data on economic growth, GDP and inflation of the Eurozone.