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Forex News December 30, 2021

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ECB

Visco of the ECB comments There is no need to reconsider the ECB’s 2% inflation objective. 

The ECB will not stop tapering before 2023. 

It will maintain exceptionally favourable financing conditions for the economy. Expect average inflation of 3% next year, then gradually slowing to just around 2%. 

Visco makes a few passing remarks. As previously said, after PEPP ends, the ECB will either proceed with additional asset purchases or add to APP. That’s the game plan, and they’re sticking to it.

Japan

Japanese stocks end the year with the highest closing since 1989 Overall, Japanese equities had a good year. The Nikkei ended the year up 4.9 percent at 28,791.71, while the Topix climbed 10.4 percent to 1,992.33. Both indexes have posted their best year-end closes since 1989. 

It has been a difficult year for Japanese equities at times, notably since the BOJ revised its guidance on ETF purchases in March.

Since March, Japanese equities have struggled to build on gains, but the Topix continues to thrive despite a shift in attention toward ETF purchases in general. 2022 may be a more difficult year to navigate, but the BOJ commitment remains in place.

UK

Nationwide home prices in the United Kingdom increased by 1.0 percent in December, compared to a 0.9 percent increase in the previous month. 

Latest statistics from the UK Nationwide Building Society – 30 December 2021 Prior +0.9% 

House prices are up 10.4 percent year on year, while prior prices are up 10.0 percent. 

House price increase in the United Kingdom is expected to continue towards the end of the year, as market demand remains extraordinarily strong. However, Nationwide notes that the outlook remains somewhat uncertain, with the strength of the housing market surprising in 2021 and possibly repeating in 2022. 

They do, however, believe that circumstances will slow next year, owing in part to the Bank of England raising interest rates.

Spain

Spanish annual inflation rises to the highest level since 1989 in December. Spain’s December CPI climbed to +6.7 percent year on year, the sharpest rate since 1989, up from +5.5 percent year on year in November. 

This simply reaffirms the region’s surging price pressures as the year comes to a close, putting further pressure on the ECB’s narrative that things will settle down in the coming year.

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