Pound dips against euro ahead of key ecb meeting; central bank could announce qe tapering convert usd to hkd

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ET ITEM Club’s chief economic advisor Howard Archer has warned on today’s buoyant housing figures from Halifax that house price measures can be volatile and a revival in the market might not be on its way.

"The contrast between the Halifax and Nationwide data for August highlights that house price measures can be volatile and differ from month to month between reporting agencies.

Housebuilders are among the big movers in London this morning with Barratt Developments clawing back 1pc after yesterday’s fall and Bovis Homes jumping 6.7pc on the unveiling of its turnaround strategy.

House price growth in the UK is picking up, with property prices in the three months to August 2.6pc higher than in the same three months last year, according to Halifax.

The lender’s latest house price index suggests that some "buoyancy" may be returning to the UK housing market, as house prices in the third quarter of the year were 0.1pc higher than in the second quarter.


Price growth, on this measure, has edged up for the first time since March.

Despite the annual growth rate in August being higher than in July (2.1pc), it has still fallen from a peak of 10pc in March 2016 when transactions grew sharply ahead of the introduction of new higher stamp duty tax rates for buy-to-let and second homes that came into effect the following month.

economics: Draghi’s claim of QE flexibility is attracting doubters https://t.co/NL5gsxUzfn pic.twitter.com/SLifFtWd6d — Value’s Vector (@pulpmarkets) September 7, 2017

Draghi will probably mention euro strength but I doubt he will express concern binary xml. QE must be stopped next year .— Fernand Pignon (@FernandPignon) September 7, 2017

"Instead, the focus of next week’s meeting will be on the ECB’s new staff macroeconomic forecasts. We think the key reason for staying put on 7 September is the sharp (more than 5%) rise in EUR/USD since late June – a move that the ECB will not want to turbo-charge through additional hawkish rhetoric.

"Trying to adjust its communication relatively little suggests to us that the ECB might well keep the QE easing bias in place next week." © Provided by The Telegraph

"The ECB is currently signalling that rates will not begin to rise until well after the end of QE. The sharp strengthening of the euro has prompted the market to push back expectations for an ECB rate hike into 2019 which suggests that the market views their guidance as credible.

"A slower pace of QE and/or rate hikes in the coming years is the ECB’s best chance to dampen euro strengthen 1 usd to krw. Verbal intervention on its own is unlikely to prove effective beyond the near-term"

"According to the latest news, the ECB’s technical committee created different QE scenarios on the size and the duration of the program and none of them is identified as a preferred scenario.

"The announcement will likely be delayed to next month’s meeting due to the strong euro, low inflation and global risks euro pound exchange rate forecast. This week’s press conference could be about what President Mario Draghi won’t say."

Bovis Homes’ share price has soared more than 8pc as its new chief executive updated investors on his strategic review, which will include building fewer homes and paying out more cash to shareholders, in an attempt to get the beleaguered housebuilder back on track. © Provided by The Telegraph

He said that he would streamline the business and its balance sheet, reducing the number of employees, disposing of developments outside its core areas, and lowering infrastructure spending.

He also added that the company would merge operating regions to create seven key areas, and that the business would aim to build just 4,000 homes a year, a step down from the high-volume model in which the company aimed to build up to 6,000 per annum. To please investors, the company will hike its dividend and plans to pay out special dividends totalling £180m by 2020.

In anticipation of the decision at the ECB, eurozone government bond yields have jumped higher and a nervy euro is bouncing around on currency markets this morning.

The euro suddenly spiked higher at just after 8.30am as traders appeared to get very excited by Reuters’ news feed saying that the decision would be due after 12.45pm rather than bang on the dot like normal.

The newswire agency has since corrected the mistake and emphasised that the decision is expected to drop on time. Traders really are itching for something, aren’t they?

Euro jumps on RTRS headline that #ECB says MonPol decisions to be issued AFTER 1345 CET python example code. Now it’s AT 13:45 CET cool pictures to draw for beginners. Maybe something is changing? pic.twitter.com/HkL64W8qIN — Holger Zschaepitz (@Schuldensuehner) September 7, 2017

Markets at the last policy meeting in July were largely unconvinced by Mr Draghi emphasising the need to continue the ECB’s large quantitative easing programme with the euro still jumping to an eight-month high against the pound.

Even if the ECB delays its QE plans, a bullish phase on the eurozone’s strength could still send the euro soaring or a cautious word on inflation could send it sinking on currency markets.

Worries that the euro’s strength will weigh too heavily on the currency bloc’s inflation figures are thought to be the main roadblock within the central bank but the strength of the region’s recovery has created a growing clamour for tighter monetary policy.

Yesterday Deutsche Bank chief executive John Cryan and Germany’s finance minister Wolfgang Schäuble both used a conference in Frankfurt to call for a shift in policy with the former saying that the “era of cheap money in Europe should come to an end” even with the current strength of the euro, which has spent the summer advancing towards parity with the pound.

right #mariodraghi let’s see your hand ! Oh, the whole planet knows what you’ve got already. Good luck with that #unwind — Peter G. Walsh (@pgwalsh) September 7, 2017

The consensus of economists believe that the ECB will hold off from revealing its plans to taper the central bank’s €60bn-a-month quantitative easing programme until at least October (some believe it will now wait until December) but the markets as always will hang to every word from ECB president Mario Draghi’s lips for any subtle shift in tone.

Mr Draghi’s fingers were burnt earlier in the summer when the euro soared after he hinted that the central bank’s policy would soon change due to the eurozone’s strength and since then he has remained tight-lipped, giving little away in the last policy decision or at his appearance at the Jackson Hole conference.

If the QE tapering plans are not revealed today, the ECB’s revised forecasts on inflation and growth will be worth keeping an eye on this afternoon to see if the central bank believes that the strong euro will weigh too heavily on already sluggish inflation.

After a summer of speculation and crucially a stronger euro, today’s ECB policy decision could end up being a non-event but the markets will still be hanging onto the central bank’s president Mario Draghi’s every word.

Mr Draghi and co are expected to hold off from tightening monetary policy this time but traders will be hunting for any clues on the central bank’s prognosis on inflation and growth.

Ahead of the key decision due at 12.45pm, the pound has nudged down to €1.0928 against the euro, the main culprit for the ECB holding off from tapering its quantitative easing programme.

Asian markets rise on relief over surprising US debt ceiling deal eliminating near-term risk of a govt shutdown rate gbp to usd. Oil jumps. Euro eyes #ECB . pic.twitter.com/7iG7iVzAHt — Holger Zschaepitz (@Schuldensuehner) September 7, 2017

Away from the action in Frankfurt, the FTSE 100 has edged up into positive territory with tobacco giant Imperial Brands jumping to the top of the leaderboard after selling a 10pc stake in Logista for£231m.

The mining stocks are weighing on the index most early on while on the FTSE 250 Bovis Homes’ turnaround plan has been well-received by investors, its shares popping 6.3pc.

Economics: Halifax HPI m/m (UK), NIESR GDP Estimate (UK), RICS House Price Balance (UK), Unemployment Claims (US), Revised Nonfarm Productivity q/q (US), Revised Unit Labor Costs q/q (US), ECB Policy Meeting (EU), Industrial Production m/m (GER)

House price growth in the UK is picking up, with property prices in the three months to August 2.6pc higher than in the same three months last year, according to Halifax.

The lender’s latest house price index suggests that some "buoyancy" may be returning to the UK housing market, as house prices in the third quarter of the year were 0.1pc higher than in the second quarter usd nzd chart. Price growth, on this measure, has edged up for the first time since March.

Despite the annual growth rate in August being higher than in July (2.1pc), it has still fallen from a peak of 10pc in March 2016 when transactions grew sharply ahead of the introduction of new higher stamp duty tax rates for buy-to-let and second homes that came into effect the following month.

The average house price in the UK now stands at £222,293 – just above the previous high of £222,190 in December 2016. © Provided by The Telegraph

economics: Draghi’s claim of QE flexibility is attracting doubters https://t.co/NL5gsxUzfn pic.twitter.com/SLifFtWd6d — Value’s Vector (@pulpmarkets) September 7, 2017

Draghi will probably mention euro strength but I doubt he will express concern . QE must be stopped next year .— Fernand Pignon (@FernandPignon) September 7, 2017

"Instead, the focus of next week’s meeting will be on the ECB’s new staff macroeconomic forecasts javascript print command. We think the key reason for staying put on 7 September is the sharp (more than 5%) rise in EUR/USD since late June – a move that the ECB will not want to turbo-charge through additional hawkish rhetoric. © Provided by The Telegraph © Provided by The Telegraph

"The ECB is currently signalling that rates will not begin to rise until well after the end of QE. The sharp strengthening of the euro has prompted the market to push back expectations for an ECB rate hike into 2019 which suggests that the market views their guidance as credible.

"A slower pace of QE and/or rate hikes in the coming years is the ECB’s best chance to dampen euro strengthen usatoday com. Verbal intervention on its own is unlikely to prove effective beyond the near-term"

"According to the latest news, the ECB’s technical committee created different QE scenarios on the size and the duration of the program and none of them is identified as a preferred scenario.

"The announcement will likely be delayed to next month’s meeting due to the strong euro, low inflation and global risks aud usd forecast. This week’s press conference could be about what President Mario Draghi won’t say."

Bovis Homes’ share price has soared more than 8pc as its new chief executive updated investors on his strategic review, which will include building fewer homes and paying out more cash to shareholders, in an attempt to get the beleaguered housebuilder back on track.

He said that he would streamline the business and its balance sheet, reducing the number of employees, disposing of developments outside its core areas, and lowering infrastructure spending.

He also added that the company would merge operating regions to create seven key areas, and that the business would aim to build just 4,000 homes a year, a step down from the high-volume model in which the company aimed to build up to 6,000 per annum. To please investors, the company will hike its dividend and plans to pay out special dividends totalling £180m by 2020.

In anticipation of the decision at the ECB, eurozone government bond yields have jumped higher and a nervy euro is bouncing around on currency markets this morning.

The euro suddenly spiked higher at just after 8.30am as traders appeared to get very excited by Reuters’ news feed saying that the decision would be due after 12.45pm rather than bang on the dot like normal.

The newswire agency has since corrected the mistake and emphasised that the decision is expected to drop on time. Traders really are itching for something, aren’t they?

Euro jumps on RTRS headline that #ECB says MonPol decisions to be issued AFTER 1345 CET. Now it’s AT 13:45 CET. Maybe something is changing? pic.twitter.com/HkL64W8qIN — Holger Zschaepitz (@Schuldensuehner) September 7, 2017

Markets at the last policy meeting in July were largely unconvinced by Mr Draghi emphasising the need to continue the ECB’s large quantitative easing programme with the euro still jumping to an eight-month high against the pound.

Even if the ECB delays its QE plans, a bullish phase on the eurozone’s strength could still send the euro soaring or a cautious word on inflation could send it sinking on currency markets.

Worries that the euro’s strength will weigh too heavily on the currency bloc’s inflation figures are thought to be the main roadblock within the central bank but the strength of the region’s recovery has created a growing clamour for tighter monetary policy.

Yesterday Deutsche Bank chief executive John Cryan and Germany’s finance minister Wolfgang Schäuble both used a conference in Frankfurt to call for a shift in policy with the former saying that the “era of cheap money in Europe should come to an end” even with the current strength of the euro, which has spent the summer advancing towards parity with the pound.

right #mariodraghi let’s see your hand ! Oh, the whole planet knows what you’ve got already. Good luck with that #unwind — Peter G. Walsh (@pgwalsh) September 7, 2017

The consensus of economists believe that the ECB will hold off from revealing its plans to taper the central bank’s €60bn-a-month quantitative easing programme until at least October (some believe it will now wait until December) but the markets as always will hang to every word from ECB president Mario Draghi’s lips for any subtle shift in tone.

Mr Draghi’s fingers were burnt earlier in the summer when the euro soared after he hinted that the central bank’s policy would soon change due to the eurozone’s strength and since then he has remained tight-lipped, giving little away in the last policy decision or at his appearance at the Jackson Hole conference.

If the QE tapering plans are not revealed today, the ECB’s revised forecasts on inflation and growth will be worth keeping an eye on this afternoon to see if the central bank believes that the strong euro will weigh too heavily on already sluggish inflation.

After a summer of speculation and crucially a stronger euro, today’s ECB policy decision could end up being a non-event but the markets will still be hanging onto the central bank’s president Mario Draghi’s every word.

Mr Draghi and co are expected to hold off from tightening monetary policy this time but traders will be hunting for any clues on the central bank’s prognosis on inflation and growth.

Ahead of the key decision due at 12.45pm, the pound has nudged down to €1.0928 against the euro, the main culprit for the ECB holding off from tapering its quantitative easing programme.

Asian markets rise on relief over surprising US debt ceiling deal eliminating near-term risk of a govt shutdown. Oil jumps. Euro eyes #ECB . pic.twitter.com/7iG7iVzAHt — Holger Zschaepitz (@Schuldensuehner) September 7, 2017

Away from the action in Frankfurt, the FTSE 100 has edged up into positive territory with tobacco giant Imperial Brands jumping to the top of the leaderboard after selling a 10pc stake in Logista for£231m.

The mining stocks are weighing on the index most early on while on the FTSE 250 Bovis Homes’ turnaround plan has been well-received by investors, its shares popping 6.3pc.

Economics: Halifax HPI m/m (UK), NIESR GDP Estimate (UK), RICS House Price Balance (UK), Unemployment Claims (US), Revised Nonfarm Productivity q/q (US), Revised Unit Labor Costs q/q (US), ECB Policy Meeting (EU), Industrial Production m/m (GER)


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