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  
FOMC expect to reach neutral policy

The FOMC minutes highlighted some increased risks to the US economy particularly concerning trade relationships but the view still holds that the Fed should...

US FOMC expected to raise rates again

UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index – Input (YoY) (May) is expected...

PMI expected to weaken further

UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers...


BOE Expected to Keep Rates at 0.5%

UK Industrial Production (YoY) (Mar) is expected to be 3.1% against a previous 2.2%. Industrial Production (MoM) (Feb) is expected to be 0.2% against...

Consumer Price Index Takes Centre Stage

UK Budget Report will be released. This is a mini-budget and outlines the government’s updated budget for the fiscal year, including infrastructure...

US earnings hit sweet spot for markets

The US Nonfarm Payrolls data released on Friday showed a strong increase in job creation and, combined with the lower than expected increase...


Bank of Japan interest rate decision

The Bank of Japan Interest Rate Decision was as expected and left unchanged at -0.1%. The Japanese 10-Year JGB yield target is around zero percent...

Oil Gains and GBP Stumbles

On Tuesday, the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice...

Geo-Politics will be the focus of the week

This week will be dominated by Geo-Politics as the US Tax Bill needs to be reconciled between the Senate and House, whilst UK Prime Minister...

  


Share: