ECB pledges low rates
The European Central Bank kept interest rates at the new historic low of 0.25%, in line with expectations. But the real focus was on Mario Draghi's press conference. Mr Draghi pledged to keep interest rates low for as long as necessary, and given the slump in economic activity in France and Italy that could mean we will see rock-bottom rates for a prolonged period. Rather than dwelling on concerns about deflation, Mr Draghi has chosen to take the long view and hope that inflation will pick up once the recent interest-rate cut has trickled down into the economy. The ECB has reassured the market that it has the relevant tools to reignite economic activity in the region, but telling banks to lend money is a different story.
US jobless figures strengthening
US traders are trembling as the tide of tapering is drawing nearer. A strong set of jobless claims figures today and good ADP figures yesterday have set the tone for tomorrow’s unemployment rate. Sooner or later traders will grow out of the mentality that good news is bad news, but for the time being this attitude is ingrained. The Federal Reserve’s final meeting of 2013 is in less than two weeks, and Ben Bernanke is checking his list and trying to find out if the markets have been naughty or nice.
Bad news for gold
Gold has taken a tumble over tapering fears, and a strong non-farm payrolls figure tomorrow could push the metal towards $1200.
Aussie under pressure
The Australian dollar has yet to recover from its collapse yesterday. Australia's declining economy and the fragile Chinese credit market are behind its poor performance.