ECB preview: A hold is widely expected – TDS

FXStreet Insights Team FXStreet

A hold is widely expected for the July ECB meeting. The meeting will not offer much action for the Euro (EUR), and we’re biased towards a weaker EUR, TDS macro strategists note.

FX portfolios are biased towards a weaker EUR

“A hold is widely expected for the July meeting, in line with ECB speak and roughly in-line data. We do not believe the GC thinks a softer tone is needed to keep a September cut on the table. Instead, we expect language to be roughly unchanged relative to June.”

“We don't think the July ECB meeting will offer much action for the EUR. However, we think that G10FX, especially the likes of EUR and the Pound Sterling (GBP), are getting back to attractive fade levels. For medium-term investors, we think 1.09 is a great entry level to fade and, more tactically, we like EUR funded carry trades through July and early August.”

“Our thematic FX portfolios are biased towards a weaker EUR, underscoring shorts in the growth, carry, equity, and risk baskets. EUR is also rich to our short-term value signal (HFFV) and we continue to expect a break below 1.05 in H2.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD off tops, back to 1.1400

EUR/USD now loses some momentum and recedes from the area of recent daily tops, revisiting the 1.1400 neighbourhood in the latter part of Tuesday session. The pair’s daily decline comes in response to the resurgence of some buying interest in the US Dollar.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.