Euro falls to 7-month low against dollar

The euro was quite volatile against the dollar around yesterday’s ECB press conference but ultimately headed down, falling to around $1.09, its lowest level since early March this year

Draghi said there are ‘no signs yet of a convincing upward trend in underlying inflation’ in the Euro area, which suggests the current QE programme (i.e. asset purchases of 80bn euro per month) will be extended beyond March 2017. While Draghi said an extension was not discussed at yesterday’s meeting, he indicated a decision will be made at the December meeting (when updated ECB staff macroeconomic projections out to 2019 will also be presented)

German bond yields fell on the prospect of a QE extension with 10-year yields now back at around 0%. In contrast, US yields nudged higher, closing up around 2-3bps

Sterling remains relatively stable against the dollar and euro, at $1.22 and 89p respectively

Equity markets were mixed yesterday, with US stock falling back a little amid weak earnings but European indices extending their gains (by c.0.6%)

Retail sales in the UK grew strongly again in the third quarter, increasing by more than 1.5% (q-o-q) after rising by just over 1% in the second quarter