The Fed and the ECB

Investors are focusing on the two key central bank meetings before the end of the month.


Smart money is on the ECB altering its forward guidance by unmistakably guiding the market with follow up rate cuts of 10bp each in September and December while introducing tiering to lower the charge that banks pay on some of their excess cash as a possible way to offset the side-effects of its ultra-easy policy.


Regardless of the weekend headlines, you would be mistaken if you took recent comments from Clarida, Williams, Evans and Powell as not pushing for a 50 bp cut. These folks are the most influential members on the board, and if it weren't for the recent strength in the US economic data published since June, a 50 bp cut would be the lock. The Fed is in regime shifting precautionary mode so even with 25 bp cut expect them to wax as dovish as can be.

The Yen

Dovish Fed view supports long USDJPY position as it will lower USD funding cost while the pro cycle cut will boost both US growth expectation and US equity markets.

The Pound

Even with the Euro struggling under the weight of negative yields, but given the numerous inches of newsprint column space given the Brexit headlines over the weekend, traders rotated out of short Euro into short Pounds today given the apparent path of least resistance ahead of the ECB which is all but priced into the Euro.

Oil markets

Oil price moved higher after a sequence of events over the weekend, underscored the ongoing risk of supply disruption being brought about from tensions in the Middle East. But taking target practice at a drone is a long way away from taking aim at a $334 million F22 fighter jet. While there are surges of smoke arising for from the Middle East supply-risk factors but with no fire, prices made a round trip today, and we're back to Asia opening level.

Vanguard Market Pte Ltd provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.

Opinions are the authors — not necessarily Vanguard Markets Pte Ltd or its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: Fiber has lost its upward trajectory, eyes PMIs and Lagarde speech

EUR/USD is on the defensive, having dived out of key ascending trendline. ECB President Lagarde on Thursday said risks to the outlook remain on the downside. German and Eurozone PMIs will likely guide the price action on Friday.


GBP/USD: Mildly bid above 1.3100 ahead of the key PMIs

GBP/USD gradually recovers Thursday’s losses as it takes the bids around 1.3125 ahead of the London open. The pair might have benefited from the EU-UK trade positive headlines but market players are waiting for the UK January preliminary PMIs for fresh impulse.


Forex Today: Cautious as China coronavirus spreads rapidly amid Lunar New Year holiday

The market mood remained fragile in Friday’s Asian trading, as a sense of caution prevailed amid concerns over the rapid spread of the China coronavirus outbreak globally, despite the Chinese authorities extending their containment efforts.

Read more

Gold: Portrays rising trend-channel on H4, Coronavirus in focus

Gold prices lack momentum while trading around $1,561.50 during early Friday. Even so, the bullion stays inside a short-term ascending trend-channel formation that portrays the strength of the underlying momentum.

Gold News

USD/JPY stuck in range around 109.50 amid China coronavirus concerns

USD/JPY sticks to its range play around the midpoint of the 109 handle amid rising fears of the Chinese coronavirus outbreak globally, upbeat Japanese CPI data and a minor bounce seen in the US dollar across the board. Focus shifts to US PMIs. 


Forex Majors