Mario Draghi, European Central Bank boss, left the ECB base rate unchanged today. Draghi did not seem too stressed about the surging euro, the result of the declining muscle of the dollar as well as euro-land economic confidence; the euro hit $1.25 earlier.
But there was clear unease about inflation, or lack of it. The ECB will continue to pump cheap cash into the economy in an attempt to get inflation to 2%, currently around 1.4%. Were the ECB monthly cash dump to stop or tighten too soon, that could push the euro higher, making exports even pricier for exporters.
For now the stimulus cut-off date remains open but the end appears inevitable – hence a higher euro today. The pound continued to rise today, surging +0.61% to 1.4305 against the dollar while an also-strong euro saw sterling slip -0.3% to 1.144.
In Davos, chancellor Philip Hammond was talking up a ‘soft’ Brexit to safeguard the UK economy with only “modest” changes to the UK’s relationship with the EU. Incendiary words for some back at home. Tonight the FTSE 100 was down almost 28 points at 7,615; Smith & Nephew shares were +4% higher tonight with a stronger showing from high street retailer Next also, up +3.5%.
- UK FTSE 100 7,615.84 -0.36%
- DAX 13,275.09 -1.06%
- CAC 40 5,467.96 -0.50%
- Euro Stoxx 600 398.32 -0.62%
- Dow 26,347.50 +0.37%
- S&P 500 2,839.47 +0.07%
- Nasdaq 7,413.66 -0.02%
- Nikkei 225 23,816.33 +0.03%
- Gold 1,357.00 +0.05%
- Oil WTI 63.40 +0.05%
Trump attempts to patch up US-UK relationship – UK visit?
President Trump made a priority of talking up the UK-US ‘special relationship' shortly after his arrival in Davos today. "I have great respect for everything you [Theresa May] are doing, we love your country, I think it's really great."
He was quick to hit on trade. Current negotiations “are going to lead to tremendous increases in trade between our two countries which is great for both in terms of jobs. We look forward to that.”