Europe’s feeble economy will get another shot in the arm Thursday when Mario Draghi is expected to unveil an interest rate cut and even more money printing.
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The U.S. dollar opened down against the New Taiwan dollar as traders here locked in their gains posted a day earlier on the back of the local central bank’s intervention to boost the U.S. currency’s value, dealers said.
The current stimulus program based on bond purchases had run for eight of its planned 19 months, but “had so far not been able to deliver a noticeable impact on its final target, i.e. moving inflation decisively to a higher path”, the account said. The Standard & Poor’s 500 index rose seven points, or 0.3 percent, to 2,087 and the Nasdaq composite index rose 12 points, or 0.2 percent, to 5,120.
Jonathan Loynes, chief European economist at Capital Economics, said the inflation numbers have given the “green light” to the ECB to announce “much-needed additional stimulus” on Thursday. Japan’s Nikkei .N225 ended up 1.3 percent, closing above the 20,000 level for the first time since August.
As a high-risk asset with the potential for greater yields, the “Kiwi” has benefitted from trader caution ahead of interest rate decisions, not only from the European Central Bank, but also the US Federal Open Market Committee (FOMC) meeting in the middle of December.
CMC Markets’ Michael Hewson said that these sorts of signs of life in the euro zone economy could limit the aggressiveness of European Central Bank stimulus. US crude CLc1 added 0.4 percent to $41.84 a barrel. Brent crude, which is used to price oil internationally, lost 14 cents to $44.30 a barrel in London.
Some preliminary jobs data out Wednesday supported the thesis that the U.S.jobs market continued to improve last month.
“The fact that they didn’t sound too bothered by the Aussie dollar holding up broadly against falling commodities (prices) was probably read as a sign that they’re not yet ready to start (talking down) the currency and that was read as bullish”, said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in NY.
Stocks briefly pared early gains after a key gauge of USA manufacturing showed that activity in the sector unexpectedly fell into contraction territory for the first time in three years.
Against the yen, the dollar edged up about 0.1 percent to 123.24.
One euro is now worth just $1.06, down from $1.15 just two months ago – that’s a fall of almost 8%.
In the USA, most of the focus will be on the November job’s report, to be released Friday.
US stocks closed higher on Tuesday despite mixed USA economic data as treasury yields and the dollar declined while oil prices were choppy ahead of an OPEC meeting later this week.
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The dollar.DXY gained over 3 percent last month against a basket of currencies on expectations that the Fed is gearing up for a rate hike on December 16.
