European Central Bank eyes end to bond-buying scheme

Drama Over?       Italian two-year yields though not back to pre-crisis levels are much lower than in late May

Drama Over? Italian two-year yields though not back to pre-crisis levels are much lower than in late May

Eyes are now on the European Central Bank, which is discussing Thursday when it might end its stimulus program.

The yen was 0.2 per cent weaker at ¥110.56 per dollar.

"If the United States takes unilateral protectionist measures and harms China's interests, we will respond immediately and take necessary measures to firmly safeguard our legitimate rights", Foreign Ministry spokesman Geng Shuang said Friday.

The dollar slipped against its global peers Friday and global stocks fell as the USA slapped new tariffs on Chinese goods, reviving the markets fears of an escalating trade war, dealers said.

ECB President Mario Draghi declined to give more detail about the timing of rate moves in a news conference after the policy meeting, this time held away from the bank's Frankfurt headquarters in the Latvian capital Riga.

European markets were mixed, while stocks in Asia were mostly lower.

Expectations of higher U.S. interest rates are also helping to make the U.S. Dollar a more attractive investment. Although it might seem like a positive development, markets' enthusiasm for the Euro sank when it appeared that interest rates would remain stagnant through the summer of next year.

U.S. President Donald Trump will meet with his top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods, a senior Trump administration official said.

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"The main focal point is whether the euro will bottom out" against other major currencies following the European Central Bank decision, an official at a foreign exchange margin trading service firm said.

"The ECB has made it clear that it does not want quick rate hikes, although it now considers progress towards the inflation target as "substantial".

The pan-European STOXX 600 index rose 0.2 per cent by 0710 GMT, up 2.2 per cent on the week, as further falls in the euro pushed the euro zone index up 0.2 per cent to a three-week high.

There's also a political challenge in the form of Italy's new government and weakening export demand.

While the Federal Reserve and the ECB provided much of the week's central bank fireworks, the Bank of Japan produced no surprises at the end of a two-day policy meeting on Friday and looked set to continue its asset purchases for some time. The central banks are withdrawing stimulus efforts that started during the Great Recession as their economies recover.

At the same time, the Federal Reserve declared that it would likely increase the USA rates twice in 2018 and four times in 2019, according to AFP.

Oil prices were little changed as investors eyed a key Opec meeting in Vienna.

West Texas Intermediate crude oil futures were down 0.2 per cent at US$66.76 per barrel; Brent was down 0.6 per cent at US$75.49.

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