Market Disappointed by ECB Decision, Eyes on US Jobs

SHANGHAI, Aug. 3 (SMM) – The European Central Bank and the Bank of England failed to announce any immediate measures, dashing investors’ hopes. In response, base metals fell rapidly. Metal markets will unlikely turn around in the near term against the sagging economic conditions and a lack of policy supports.

The ECB chairman Draghi vowed last week to do everything possible to save the euro, helping bolstering global financial markets. However, Draghi gave not positive reply to the longed ECB’s securities markets program at the press conference August 2, turning his vow into an empty promise. As a result, financial markets dived immediately with base metals showing sharp declines.
 
The ECB earlier decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively. Draghi said it was not a proper time for lowering interest rates, and the ECB will launch a mechanism for direct open-market operations in the next few weeks so as to stabilize borrowing costs in the euro zone countries. The disappointing remarks and an absence of concrete actions triggered uncertainties to the implementation of the plan.

US Labor Department will release its non-farm payroll data Friday night. Market survey shows the data is expected to present significant growth in July, but the slow pace of recruitment at enterprises may not be enough to lower US unemployment rate. Expectations on implementation of QE3 will rise if the employment data misses forecast. However, an increase in employment data will likely give a boost to metal markets.