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ECB Ends QE Programme

Published December 14, 2018

The Kiwi opens relatively flat today with the biggest gains made against the Yen as it flirts with the 78.00 level again.

ECB signals end to QE programme

The European Central Bank said it would end its quantitative easing program at the end of this month as planned, and left interest rates unchanged. The ECB promised to keep interest rates at current record lows through to at least mid-2019 and said they would keep investing maturing bonds back into the market for an “extended period” after the first rate increase. Markets are not pricing in a rate hike until early 2020. ECB President Mario Draghi described the decision to end the 2.6 trillion euro QE program as “continuing confidence and increasing caution”. Risks remain on the downside due to economic growth slowing, geopolitical uncertainty, and protectionism. The Euro weakened slightly as a result.

PM May survives another day and urges EU to help get Brexit “over the line”

British Prime Minister Theresa May survived an embarrassing challenge to her leadership, winning the ballot 200-117. The vote of confidence has bought May more time to try to sell her unpopular Brexit deal to a deeply divided parliament. May now seeks EU leaders for concessions to help her win support in parliament next month, as she looks for a deal to allow a smooth exit from the EU. The pound held it’s gains overnight and the NZDGBP opens at .5424.

Data announcements coming up:

Today: China Retail Sales and Industrial Production

Tonight: European PMIs and US retail sales.

Next weeks’ key focus will be our own NZ GDP release on Wednesday followed by the US FOMC meeting on Thursday with a rate hike priced in at 73.1%.