ECB slows asset purchases, surprises investors

Tuesday, May 26, 2015

The ECB could be the cause for some confusion this week after data published on the central banks website indicated that bond purchases slowed to their lowest pace in three weeks during the week ending May 22nd, despite vocal support from officials for an acceleration of asset purchases. The balance sheet expanded by €11.8bn of government and agency debt to €134.2bn at the end of last week, somewhat puzzling market participants who had expected the central bank to push forward with significant purchases in an effort to boost liquidity and market confidence. Having slipped below 1.1000 against the dollar on Monday the euro breached support at the 50 day MA, trading towards 1.0900 early on this morning and given the significant US macroeconomic data releases today we could see further gains in the dollar against the euro, pushing back towards levels seen in mid-April.

Tensions between Greece and its creditors are once again flaring as the June 5th deadline for repayment to the IMF draws closer. Comments from officials in Athens in recent days have hinted at the reluctance of Greek officials to compromise on structural issues regarding pensions and salaries with spokesman Gabriel Sakellaridis insisting the government will pay salaries and pensions due at the end of this month, but refusing to comment on whether Athens would be able to find the near €300m needed to repay the IMF. It seems patience is wearing thin on both sides as German Chancellor Angela Merkel gave Greece until the end of May to reach an agreement on the bailout programme which would need to include structural and economic policy reforms. With Greek Interior Minister Nikos Voutsis, who has no economic decision making powers, weighing in on things over the weekend and reinforcing the stance that no payment would be made without further compromises it seems a resolution is still some way off. 

Miners in South Africa have cut over 35,000 jobs in the past two years as a combination of labour unrest, persistently weak commodity prices and rising marginal costs create a troubling environment for producers. Clashes between labour unions and the police have at times reached a bloody conclusion and data from the South African Chamber of Mines seen by the FT pins the losses at an equivalent of 1 in 14 workers in the sector. Platinum and gold miners have felt the pressure of weak commodity prices particularly acutely, with the workforce shrinking by 10,800 and 23,100 respectively between 2012 and 2014. 

Euro heads lower versus dollar

EUR Curncy Euro Spot 2015 05 26 07 34 31

Platinum prices remain under pressure throughout 2015

XPT Curncy Platinum Spot Oz 2015 05 26 07 53 38

Events for today

1330

US

Apr

Durable Goods & New Orders

1400

US

Mar

FHFA House Price Index

1500

US

Apr

New Home Sales

1500

US

May

Richmond Fed

1500

US

May

Consumer Confidence

1530

US

May

Midwest Manufacturing

Topics: Gold, ECB, EUR, Platinum
More from: Kash Kamal