Highlights of the week ended April 17

Source: Dukascopy Bank SA
Euro zone
After being briefly interrupted by a protestor chanting "end ECB dictatorship", Mario Draghi, ECB President, said there were signs that a recently launched QE programme supported the Euro zone economic recovery. Although the central bank expects the Euro block's economy to strengthen, it does not plan to curb or curtail its money-printing scheme. Draghi was also surprised that an end to the programme is being discussed so soon after it was launched. While Moody's Investors Service warned the Frankfurt-based central bank that it could soon run out of eligible bonds from some governments, Draghi brushed aside this warning. ECB President also noted that borrowing conditions for companies and households have "improved notably". Before the press conference, the ECB left its benchmark rate unchanged at all-time low of 0.05% in line with expectations. The decision came on the backdrop of signs that the Euro zone is turning the corner after years of recession and stagnation. Recent data from Markit showed that the Euro bloc's economy expanded at the fastest pace in nearly a year in March. 

UK
British inflation remained at its all-time low in March, as gas prices continued to weigh on cost of living, while prices for clothes and shoes broke with the usual pattern. The UK's inflation stayed at 0% for the second consecutive month in March, marking the lowest level since records began in late 1980s. Clothing prices fell 0.1% between February and March, the first time in the history of the consumer price index that clothing has declined during this period. The sharp fall in inflation has been caused by the precipitous decline in oil prices, as well as drops in food prices. However, core measure of inflation, which strips out volatile energy, food, alcohol and tobacco, slid to the lowest level in nearly nine years at 1.0% in March compared with 1.2% in February. 

China
China's economic growth pace slowed to the lowest in six years in the beginning of 2015, while weakness in major sectors pointed to a further loss of momentum for the world's second-biggest economy. The Chinese economy grew 7% from a year earlier, matching economists' median forecast and compared with 7.3% in the preceding quarter. Measured on a quarterly basis, growth slowed to a seasonally adjusted 1.3% between January and March, down from 1.5% in the previous three months. The data built up pressure on the Chinese government to ease fiscal and monetary policy further in an attempt to underpin the economy. China's Communist Party officials have already lowered its official growth target for this year to around 7%, which would be the nation's slowest annual expansion in 25 years. Yet, recent indicators suggest that the economy could be losing steam more rapidly than many analysts had predicted.

Canada
The Bank of Canada maintained its key interest rate on hold and said effect from an oil-price shock may be waning. The central bank kept the benchmark rate on overnight loans between commercial banks at 0.75% for a second consecutive meeting after an unexpected rate cut in January. The BoC considerably cut its first quarter growth expectations to 0% from 1.5%. Yet, outlook for Q2 and Q3 was revised upwards to 1.8% and 2.8%, respectively. In 2016, the central bank expects the nation's economy to grow at 2.5%. The BoC added that despite the devastating effects of lower crude prices, non-energy exports, investment and labour market conditions are ameliorating and will flourish in the middle of the year, largely due to strong US demand. The headline inflation is estimated to accelerate to 1% and 0.8% in Q1 and Q2, respectively, up from 0.5% and 0.3%. 

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