Key highlights of the week ended November 20

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Euro zone
The European Central Bank considered expanding its stimulus programme to support Euro zone's struggling economy at its last policy meeting. Moreover, the ECB admitted that the risk increased that the central bank would again miss its inflation target. Even though the ECB's measures proved to be effective, the central bank receives little help from outside as government reform efforts were disappointing and the European Commission investment programme lacked momentum. The minutes of the meeting showed that the threat of growth-sapping deflation has intensified since the ECB's projections in September and the central bank is predicting that the inflation rate will take longer to move back to its 2% goal. Thus, the ECB is left with two options: either to acknowledge that it is unable to fulfil its objective or to take more forceful action with a broader set of tools. The council members said they would re-examine the degree of policy accommodation at its December meeting. 

US
The minutes of the FOMC meeting in October reinforced the view that the Fed may finally hike interest rates as soon as next month, given job growth and inflation trends remain resilient and continue to improve. Yet, Fed officials remain divided, as some policy makers doubted that economic data available by the December meeting would warrant raising the target range for the federal funds rate.  Markets seemed to be getting used to the idea of higher rates in the near future, as the US central bank has now warned about rate hikes so many times. While stocks usually tumble amid increase in rates, equities rose Wednesday, a sign that a rate hike is already prices into markets. 

Switzerland
The Swiss National Bank reiterated its view that the Swiss Franc is considerably overvalued, despite spending hundreds of billions of francs on interventions to push the nation's currency lower. A strong Franc is expected to further hit Swiss exporters, who have already been suffering. Earlier in the year the central bank surprisingly abandoned its ceiling on the Franc of 1.20 per Euro, triggering a massive turbulence in the global markets. Moreover, economists suppose that the SNB may intervene in the FX markets in order to limit the appreciation in the Franc in case the European Central Bank deploys further stimulus. Euro zone stimulus could further hamper efforts to keep the Swiss Franc at its current 1.08 franc level versus the Euro, and expectations for the Franc to strengthen against its key trading partners' currency increased.

Japan
The Bank of Japan maintained its monetary policy, hoping that an economic recovery is around the corner despite soft domestic capital expenditure and uneasy global business conditions. As widely expected, the central bank reiterated its pledge to increase base money at an annual pace of 80 trillion yen through purchases of governments bonds and risky assets. The BoJ has kept monetary policy unchanged since expanding stimulus in October last year, even as falling oil prices and weak exports push Japan's inflation further away from its goal. The BoJ repeated its view that the world's third biggest economy continued to recover moderately, although production and exports have been hit hard by the slowdown in emerging markets. The central bank admitted that an annual change in the consumer inflation is likely to be around 0% for the time being, due to the effects of the energy prices drop. 

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Actual Topics

Mon, 23 Nov 2015 06:30:05 GMT

ECB is ready to act, Draghi says; Weidmann sees no need of extra stimulus

The European Central Bank is prepared to act promptly to underpin stubbornly low inflation in the Euro zone, providing investors with the strongest hint yet that the central bank will initiate a new round of fresh stimulus measures at its December meeting.

Fri, 20 Nov 2015 06:22:04 GMT

Canada's wholesale trade falters in September amid decline in motor vehicle and parts sales

The value of Canadian wholesale trade unexpectedly declined in September, weighed by a decrease in motor vehicle and parts sales for the third consecutive month, according to Statistics Canada.

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