Doting on Draghi

20 October, 2016

The ECB meeting arrives today when EURUSD is testing key levels. The mid-year lows at 1.0952 is perilously close as I write, whilst the post-Brexit referendum low of 1.0913 being in the frame after that. It’s hard to see the ECB adding to its quantitative easing policy that was last expanded in March of this year, when the deposit rate was also cut by a further 10bp. That does not remove the volatility risks for EURUSD, given the habit of ECB President Draghi to throw in some verbal bombs during the press conference. Inflation remains stubbornly low, although recent rises in energy prices and also the modest fall in EURUSD will add to inflation in the months ahead. All that said, that could not be enough to satisfy the ECB, with expectation growing for more easing measures in December of this year. That’s the same time the Fed is expected to increase rates in the US, so such monetary policy divergence is usually a powerful force in terms of currency direction, which would push EURUSD lower.

The Aussie has fallen overnight on the back of the latest jobs numbers, which showed the unemployment rate steady but the level of employment falling. That took some of the wind from the Aussie’s sails, AUDUSD reversing the gains seen in the previous session. Ahead of the ECB meeting and press conference, there is retail sales data in the UK at 08:30 GMT, where both measures are seen rising slightly from the fall in August, but these numbers are often volatile.


Source link  
Bank of England Faces Conundrum

On Wednesday, data released by the UK Office for National Statistics (ONS) showed average weekly earnings (excluding bonuses) rose...

UK Inflation at 5-Year High

The likelihood of a rise in UK interest rates, for the first time in a decade, gained momentum on Tuesday as UK CPI edged up from 2.9% to 3.0%...

US Inflation Disappoints

US Consumer Price Index data was released and failed to impress the markets. With US gasoline prices spiking, following the disruption caused by the recent Hurricanes...


Can CPI Follow PPI Lead?

In early Friday trading, the markets are relatively static as they wait, in anticipation, for today’s US inflation data that will potentially give confirmation...

Fed Minutes: Inflation Conundrum

USD broadly declined as the markets digested the release of last month’s FOMC meeting minutes. Many FOMC Members are still concerned...

UK output data falls but expectations rise

On Sunday, The Confederation of British Industry released their monthly indicator of output for UK manufacturers, retailers and service companies...


US Economy Growing Faster Than Forecast

Data released on Thursday indicated that the US economy grew at a faster pace in Q2 than expected. The US Commerce Department released...

New Fiscal Year Could See Changes

With many countries entering a new fiscal year in October, many investors are summarising this past year’s portfolio performance while setting new goals...

New US data did not add positive

Published data on construction activity in the US in August slightly exceeded expectations. The number of building permits reached...

  


Share: