Halo Financial Team
Halo Financial
Today's Highlights
Divish ECB surprises the market
Firm Non farm payroll report expected
FX Market Overview
Yesterday the ECB surprised markets by cutting interest rates by 10 basis points and announcing plans to buy asset backed securities and covered bonds in its latest attempt to push money into the flagging Eurozone economy. The ECB aims to increase its balance sheet back to 2012 levels which would imply an increase of €1 trn from current levels. The dovishness caught the market by surprise and the Euro weakened significantly. This should continue as it highlights the policy divergence between the ECB and the other major central banks who are moving away from accommodative conditions and it also proves that the ECB is willing to act to prevent further falls in inflation expectations. Eur/usd has broken through the 1.3000 level and there are commentators out there predicting sub 1.2000 over the next 12 months. Today's release of GDP is unlikely to trouble markets and current trends should prevail.
Canadian trade data came in better than expected yesterday with a surplus of C$2.6 bln on top of the C$1.9Bln in June. An excellent reading and the best run since the crisis. Today Jobs data is expected to slow a little from July but job creation should still remain above trend and keep the CAD stable.
The US dollar has remained bid following on from the hawkish comments from Fed officials and a strong reading ISM non-manufacturing PMI (59.6 versus an expectation of 57.7). Today the focus will still be in the United States as we await the release of non-farm payrolls. Another solid reading of above 200,000 is expected with the jobless rate falling to 6.1%. This would mark the 7th consecutive 200k+ reading and should keep the dollar on its current trajectory. US data has been perky of late and proved that the downturn earlier in the year was indeed mainly down to inclement weather. Continued strong labour data should ensure that the market prices in the risk of an earlier Fed tightening and keep the dollar firm.
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Editors’ Picks
AUD/USD remains firm above 0.6600 ahead of RBA
AUD/USD maintains its bullish bias well and sound on Monday, extending the multi-session recovery past the 0.6600 barrier ahead of the key interest rate decision by the RBA.
EUR/USD keeps the constructive tone near 1.0800
EUR/USD started the week in a positive note amidst the Dollar’s inconclusive price action, altogether motivating the pair to attempt a move to the proximity of the 1.0800 region, where the 200-day SMA also converges.
Gold holds on to modest gains around $2,320
Gold trades decisively higher on the day above $2,320 in the American session. Retreating US Treasury bond yields after weaker-than-expected US employment data and escalating geopolitical tensions help XAU/USD stretch higher.
Bitcoin price holds above $63K as MicroStrategy tops BTC ownership list
Bitcoin (BTC) price recorded a rather bold two days this past weekend in a surge that saw millions in positions liquidated. However, the week is off to a calm start with altcoins sucking liquidity from the BTC market.
Stagflation warning: Service economy contracts as prices rise
In another stagflation warning sign, the U.S. service sector contracted in April even as service prices rose. The Institute for Supply Management's non-manufacturing PMI dropped to 49.4 in April, dipping from 51.4 in March.