ECB to hike rates before the next downturn - Reuters poll

Joshua Gibson FXStreet

According to a poll of economists undertaken by Reuters, many are expecting the European Central Bank (ECB) to lift rates sometime in the second half of 2019, which respondents believe will happen before the next potential economic downturn.

Key quotes

"Euro zone growth outpaced that of its major peers last year for the first time since the 2007-08 financial crisis. But the latest poll of more than 100 economists, taken July 10-18, suggests growth momentum has already peaked. An escalating trade row between the United States and its trading partners remains a real risk to the euro zone and has prompted many economists to trim their growth forecasts.

Gross domestic product growth was forecast to average 2.1 percent this year, 1.8 percent next and 1.6 percent in 2020, slightly lower than the 2.2 percent, 1.9 percent and 1.7 percent predicted, respectively, last month. Still, more than 70 percent of economists - 51 of 69 - who answered an additional question said they were confident the ECB would hike rates before the next economic downturn. Eighteen economists said they were not.

“We are reasonably confident that the ECB will raise rates before the next downturn, but the risk of this not happening has clearly risen with the accelerating trade war, which has come amidst signs of slowing growth momentum,” said Elwin de Groot, head of macro strategy at Rabobank."

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

The week ahead: Dollar at a crossroads as CPI and ECB take centre stage

With the summer finally over, investors returned with a strong appetite for action. Following last week’s strong performance, the US dollar has taken a back seat so far this week, as oil, the yen and sovereign bond yields monopolized market interest.

CFTC report: Oil rebound offsets broader positioning retreat

The week in one sentence: Speculative positioning became more defensive in the week ending September 1. Yen short positioning recorded the largest deterioration, while Gold length also retreated. Oil buying returned alongside stronger prices, and Canadian Dollar and Euro positioning improved, although Euro flows diverged from weaker spot prices.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.