Markets are cautious and volatile ahead of ECB’s and BoE’s monetary policy meeting later today, as well as Friday’s EU summit, since some traders doubt the European leaders’ ability to come up with a clear plan that would solve the two-years-old debt crisis.
Investors are locking in their profits ahead of ECB’s and BoE’s last monetary policy meetings for this year, where European policy makers are believed to cut rates to record low at 1.00%, while BoE may hold rates steady awaiting for more measures from Europe.
Global conditions continue to be unstable, and the confirmation came this morning from the Australian unemployment rate which unexpectedly rose to 5.3% in Nov. from 5.2% previous, while Japan’s machinery orders unexpectedly fell in Oct. to -6.9% on strong yen and slower global demand.
Meanwhile South Korea held rates steady at 3.25% today,New Zealand held rates steady at record low of 2.5%, while Indonesia maintained rates steady at 6%, all in an attempt to sustain growth as the downside risks imposed by Europe’s debt crisis are widening and weakening demand on exports.
However some hopes that EU leaders will announce strong measures to ease the euro zone debt crisis are seen across the broad markers today, providing some markets with bullish momentum. As a result European stocks managed to rise today at opening where FTSE 100 gained 0.27% while DAX rose 0.69%.
In Asia however stocks dropped today with Nikkei 225 loosing 0.66% while Hang Seng lost 0.69% as investors were seeking safer positions ahead of the crucial summit of European Union leaders and Japan’s GDP report set for early tomorrow morning with speculations of a downside revision for growth during Q3.
Europe will lack the economic data today, however the US will release the weekly jobless claims and the wholesales inventories. Yet the attention will focus on Europe’s rate decision and Mario Draghi’s press conference during which he might announce more aggressive measures to protect Europe from the debt crisis.
Currency markets are moving in tight ranges today awaiting the ECB’s and BoE’s monetary policy meetings, where the USD is almost unchanged around the 78.40 level while the euro is moving in a tight range around the 1.3400 level. The pound is trading around 1.5720 level and the AUD is trading around 1.0285 level.
The yen strengthened today as demand on safe haven widened in Asia today, while the limited movement seen by the USD is keeping commodities in tight ranges, where oil is trading around $100.90 per barrel while gold is trading around the $1740.50 per ounce level.