Comments from ECB’s President Mario Draghi spread optimism across European equity markets and prompted a strong rally for the euro which surged above 1.1250 against the USD. Draghi reported that the QE programme seemed to work well over the past few months stating “the asset purchase programs are proceeding well…..Reaching our objectives is conditional on the full implementation of our monetary policy stance”. Regarding Greece’s debt issues he mentioned that “there should be a strong agreement – one that produces growth”.
European equities extended gains today as the CAC, DAX, IBEX and London equity benchmark indices climbed higher between 0.25% and 1.25%. Furthermore, the Athens Stock exchange rallied higher for a second consecutive session today amid hopes for a Greek deal in the coming days.
In the UK, the Nationwide Building Society Survey indicated the pace, at which UK house prices are going up, slowed in May. Data showed that UK home prices were 4.6% y/y higher in May, verifying a slowdown from 5.2% growth in April. Furthermore, the Markit/CIPS services PMI dropped sharply to 56.5 in May compared to 59.5 in April, missing analysts’ expectations. The sterling came under some pressure against the USD, trading around 1.530.
Today, the main attention will turn to the US as the Federal Reserve Bank releases its Beige Book details. In the meantime, the softer USD could provide signs of support to most commodity prices. Crude oil prices continue to remain under pressure as investors would like to be cautious ahead of the crucial OPEC meeting on Friday. Both Brent and WTI front month futures retreated today over 1.2%.