Once again, the ECB finds itself with a great weight of expectations upon its shoulders ahead of its policy meeting today. This week has seen both further falls in inflation and yesterday saw weaker than expected PMI data for the Eurozone and particularly Germany, which saw the manufacturing reading fall to a 15 month low. EURUSD retested the two-year lows seen on Tuesday. For much of the year, the ECB has been working through the options on buying asset-backed securities. This market is comparatively small in the euro area, with the ECB at the same time looking at ways to increase its liquidity. By buying such assets, loans are removed from bank balance sheets, leaving them better capitalised and more able to lend elsewhere in the economy. But the impact is still uncertain and other efforts to improve matters, such as the TLTRO lending have so far proven disappointing in their take-up. Near-term, the best and probably most effective stimulus that the ECB can hope for is a weaker currency and whilst recent measures have certainly helped that development, currency markets will be sensitive to any further signs of the ECB’s desire for currency weakness today. The interest rate announcement comes at 11:45 GMT, the press conference following at 12:30 GMT.
Elsewhere, there were some signs of the the dollar’s legs becoming a little tired yesterday, failing to make new highs against its counterparts after the ADP report beat showed that the US private-sector added more than 200K jobs for a sixth time the past seven months. The rebounds continued as more US data got released, with the Markit and ISM Manufacturing PMIs coming in below expectations and well below their August readings. This momentum continued well into the Asian session with the USD paring some of the gains it has experienced in recent months particularly versus the commodity currencies which may be boosted from the decision of Chinese policy makers to loosen property restrictions for the first time since the Great Recession.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.
Recommended Content
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
With all eyes peeled on the halving, Bitcoin is the center of attention in the market. The pioneer cryptocurrency has had three narratives this year already, starting with the spot BTC exchange-traded funds, the recent all-time high of $73,777, and now the halving.
Billowing clouds of apprehension
Thursday marked the fifth consecutive session of decline for US stocks as optimism regarding multiple interest rate cuts by the Federal Reserve waned. The downturn in sentiment can be attributed to robust economic data releases, prompting traders to adjust their expectations for multiple rate cuts this year.