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Daily News - ECB most likely to split

1. France and Germany opposed the resumption of the QE program

2. US and China will resume trade negotiations next week

3. The EU is ready to provide a new deferral of Brexit

4. The Bank of Turkey reduced the interest rate immediately by 3.25%

5. The US is considering the possibility of issuing government bonds with a 50-year maturity



As a result of the last meeting, the ECB decided to reduce the interest rate by 0.1% and  resume the stimulus measures to maintain a weakening EU economy. According to Reuters, during the meeting, the head of the Bundesbank, Jens Weidmann, the head of the Bank of France Francois Villeruoy and a member of the Board of Governors Benoit Queret strongly opposed the resumption of the QE program. The decision to resume the asset buyback program was made with a slight margin voting advantage.

The EUR / USD pair reacted to the ECB's decision with a rather strong decline, but quickly managed to recover all the losses following a press conference by Mario Draghi. Many investors expected signals from the ECB to further lower interest rates, but this did not happen. Many experts say that the ECB will not change the basic parameters of monetary policy in the next half a year, which is a signal to buy European currency.

 

On Thursday, White House officials denied Bloomberg reports earlier that China and the United States were discussing an interim trade agreement. At the same time, this morning, Vice Premier of the State Council of China Liu He said that the parties intend to resume trade negotiations next week. The negotiating delegations of the two countries will meet to discuss issues of access to each other's markets and trade balance.

 

According to Business Insider reports, the EU is preparing a new set of documents to provide Brexit grace. The resolution should be approved by the European Parliament next week. Thus, Brussels wants to avoid the “hard” Brexit scenario, which could have a very strong negative impact on the EU economy. It is expected that a new version of the postponement of Brexit will be proposed at a meeting of EU chief negotiator Michel Barnier with the British negotiating group.

 

The Turkish lira surprised the financial markets with an ambiguous reaction to the next reduction in the interest rate by the Bank of Turkey. The regulator made an unexpected decision to reduce the interest rate immediately by 325 bp, which led to a sharp strengthening of the national currency against the dollar.

 

For 11 months of the fiscal year, the US budget deficit exceeded $ 1 trillion dollars, for the first time in 7 years. The administration of the White House intends to implement a number of measures to curb the growth of expenses on servicing the public debt. As US Treasury Secretary Stephen Mnuchin said on Thursday, the Treasury is now considering issuing government bonds with a 50-year maturity. Donald Trump also intends to continue to exert pressure on the Fed leadership to reduce short-term interest rates, which will help reduce government debt servicing costs.

 

News worth paying attention to today:

12.30 GMT. USA: US Retail Sales Report.