Is the ECB Increasing Interest Rates?

6 June, 2017

Is the ECB Increasing Interest Rates?

There are not many political or economic events on the schedule today. The only important economic event is the Job Openings and Labor Turnover Survey (JOLTS), a very unpredictable event with a mixed history of market reactions.

In any case, job openings are predicted to have a rise above trend and this difference between the high levels of job openings and the lower rise in nonfarm payrolls can be easily resolved. As the number of jobs increases and the number of workers decreases it gets tougher to fill a particular job opening. This does not bode well for any future rises in NFP but bodes well for upcoming wage increases which will also have a positive effect on the dollar.

Everyone is looking ahead to Thursday’s ECB meeting with the main debate resolving around the key ECB interest rates and whether these will go lower or even higher. There is also the question about their growth outlook with the market waiting to see whether they are going to alter the assessment of risks on growth to balanced, too.

These changes will be the first step towards changing their entire policy. If these changes do take place during the June meeting, then they can start the prep work for tapering during their next meeting in July. However, this could be a highly unlikely scenario with the tapering process being in fact delayed, giving the doves an even greater support.

The recent terror attacks that took place in the UK overshadow polling results. Even though the recent events were clearly the major focus of all UK traders, the latest weekend polls- the final weekend polls ahead of the elections- were extremely interesting; the conservative party, which had a strong lead in previous polls, saw a further decrease on their lead.

AUD/USD

Like the majority of commodity currencies, the Australian dollar was also falling against USD as a result of the poor news in Australia.
The pair achieved in its correction the key resistance zone of 0.7500, reinforced by the lower boundary of the pink channel on D1.

Support and resistance

  • Support levels: 0.7440, 0.7370, 0.7330, 0.7250.
  • Resistance levels: 0.7600, 0.7570, 0.7490.

US Crude Oil

On the D1 chart, crude oil broke through the middle line of Bollinger Bands and continued the movement to their lower border. There is a strong support level of 47.15

Support and resistance

  • Support levels: 47.15, 46.50, 45.80, 44.00.
  • Resistance levels: 48.00, 49.30, 50.00, 51.70, 51.70, 52.50, 53.00, 53.50, 54.10, 54.50, 55.00.

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