Market Drivers March 14, 2018
Draghi drives EURUSD down
All eyes on US Retail Sales
Nikkei -0.87% Dax 0.39%
Oil $61/bbl
Gold $1325/oz.
Bitcoin $9000
Europe and Asia:
CNY IP 7.2% vs. 6.1%
CNY Retail Sales 9.7% vs. 9.8%
North America:
8:30 USD Retail Sales
Mario Draghi jawboned the euro in morning European dealing today pushing the pair towards the 1.2350 from its session highs of 1.2412 set in early Asia trade.
In a speech in Frankfurt today ECB President stuck to his dovish message from last week’s press conference reiterating the idea that any exit from QE will be gradual. Although Mr. Draghi noted that inflation was on the right track uncertainties still remained as to the pick in the price level and even once outlook becomes less dependent on net asset purchases, monetary policy will still need to be patient, persistent, and prudent.
Mr. Draghi’s message was echoed by ECN council members Coeure ane Praet, both of who reiterated the notion that inflation remains below from the central bank’s target of 2%.
The concerted effort by ECB officials indicates the realization by policymakers that the persistently high exchange rate for the currency is having deflationary impact on price levels. And while ECB officials are not considering any overt intervention measures, the form of soft jawboning is clearly an attempt to slow down the rise of the euro and keep it below the 1.2500 mark.
By all measures, the euro should be lower as interest rate differentials between US and Europe continue to expand, but chaotic White House policy, muted inflation data and so far sub-par growth in 2018 has cast doubt on the ability of the Fed to follow through with its hawkish talk.
Today’s US Retail Sales will be a key tell on the strength of the US consumer and the impact of the newly enacted tax cut that presumably added more discretionary income to consumers pockets this year. Market expectations are for a rebound of 0.3% versus -0.3% the period prior. If spending does recover, it would provide a boost to dollar bulls which has been constantly derailed in their attempt at a rally, by the turmoil in the White House. USDJPY could take and hold the 107.00 figure if spending proves to be healthy while EURUSD, already weakened by Draghi’s comments could tumble through 1.2350 support.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.