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Do Not Expect Too Much of Today's ECB Rate Decision

Thu, Jul 2 2009, 09:40 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG


The market expects an unchanged ECB rate at 1% today, to be published at 13.45 CET. But what is more important are the comments to the protocol at 14:30 CET, where the market sees more pronounced signals of monetary easing, i.e. buying up the Eurozone’s bonds. That would give a boost to the Euro, but we doubt that these announcements will be clear enough to accomplish that. This European morning, for instance, the EUR / USD is in retreat, although oversold enough right now to give room for some recovery today.

Accordingly, we put our trading bands a little lower for the dollar today in the major pairs, as described below. Note the 14:30 CET U.S. unemployment rate and the non-farm payrolls for June, usually market-moving factors, although these are lagging indicators for the economy. Expected is a slightly worse development in these numbers.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The pair was in retreat in all of early European trading and is currently priced at 1.4090. We see some recovery potential today, but not beyond yesterday’s levels around 1.4190.

GBP / USD
Cable fell further after a weak Asian session in this European morning and is currently trading around 1.6350, just testing a longer-term support zone. We expect this zone to hold in today’s trading and see some recovery potential up to the 1.6450 mark.

USD / CHF
The dollar attempted some recovery against the Swiss franc in early European trading and is priced right now around 1.0800. We do not expect this recovery to go far today, bumping soon into resistance around 1.0840. Setbacks from there are likely, to 1.0760.

USD / JPY
A slight recovery of the dollar against the yen emerged in Asian trading, which is continuing right now in the European morning. Currently trading at 96.65 in low volatility, we expect this recovery to come to a halt at the 96.90 mark today.

Published on  Thu, Jul 2 2009, 09:42 GMT


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Swiss e Trade AG shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Swiss e Trade that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.

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