Markets clench ahead of ECB conference

A sense of unease scatters across the financial markets ahead of the heavily anticipated European Central Bank (ECB) press conference on Thursday in which the ECB is broadly expected to unleash further stimulus measures to jumpstart the Eurozone economy. The expectation of another 0.1% slash in deposit rates to 0.4% remains elevated, with speculations mounting over whether the central bank will expand its bond buying program in a bid to devalue the Euro further. These heightened expectations of further stimulus measures should pose a threat to the Euro bears as the risk of under delivery is quite high with some stigma of December’s meeting still lingering in the background. It seems that despite all the efforts of the central bank to make amends, the Eurozone remains in a losing battle with falling inflation while external developments such as declining oil prices and China woes have exposed the nation to downside risks. Mario Draghi will undoubtedly repeat his dovish mantra to inspire the Euro bears today but this may fall on deaf ears as market participants are increasingly losing faith in the ECB’s commitment to its mandate and ability to deliver results.

The uncertainties over the ECB’s pending decision can be seen in the EURUSD which has meandered in a wide range for an extended period with some resistance found at 1.1050. If the ECB fails to deliver today then bulls may receive encouragement to breach this level and send the pair higher. From a technical standpoint, prices are trading below both the 20 and 50 SMA while the MACD has crossed to the downside. This pair remains in standby ahead of the ECB press conference today.

Markets shrug positive China CPI

The global markets were almost unmoved in the early sessions of Thursday following the firm China consumer inflation of 2.3% in February which was the biggest rise in nearly two years and showed some positive signs for China’s economy. Although inflation may have shown signs of recovery, the tepid Manufacturing and dismal China trade data have elevated concerns over China’s economy growth while capital outflows continue to accelerate incessantly. Sentiment remains bearish for China and despite the rise in CPI for February; expectations are still live of further stimulus measures from Beijing in a bid to stimulate economic growth in China.