ECB Extends Stimulus Program

The ECB has been running a €60 billion per month bond buying program in an attempt to revive growth and inflation among the Euro Area member states. The Central Bank announced on Thursday that it will now extend the stimulus at a pace of €30 billion in purchases per month from January until at least September of 2018, but tried to provide a cushion by deciding to continue reinvesting proceeds from maturing securities. Money markets are now pushing the likelihood of a first 15-basis point ECB interest rate hike further into the second quarter of 2019. This decision contrasted sharply with speculators anticipating the Central Bank would surprise would a hawkish decision. The EURUSD pair has since snapped a two-day rally following the announcement to currently hover around the 1.1640-mark, down nearly -1.30% for the week.

Fears of winter supply shortages sent prices of finished goods like steel and copper higher, resulting in a steep rise in September profits at China’s industrial firms.  Figures unveiled by the National Bureau of Statistics showed that profits surged 27.70% in September from a year earlier to CNY 662.18 billion ($99.46 billion) compared to the 24.00% gain recorded in August. Apart from marking the fastest growth pace since December of 2011, profits expanded by 31.50%. During the first nine months of the year, firms reported profits of CNY 5.58 trillion, a 22.80% jump from the year-ago period. The sustained earnings growth should give Chinese policymakers more room to restructure inefficient state-owned enterprises, which dominate the country’s industrial establishment and account for a significant chunk of its corporate debt. Meanwhile, the AUDNZD pair is down in Friday Asian trade to around 1.1160.