European Central Bank

After a quiet start to the week, market-moving data has finally picked up, with traders keying in on three major events...

The market is clearly expecting the ECB staff to lower their projections on GDP and inflation.

Looking ahead, the upcoming week features interest rate decisions from three major central banks (RBA, BOC, and ECB), while data highlights include UK and US services PMIs, Aussie GDP, Chinese trade figures and jobs reports from both North American nations.

As unanimously expected, including by my colleague Fawad Razaqzada, the European Central Bank made no changes to monetary policy in today’s meeting. In its statement, the institution reiterated that it would leave interest rates unchanged through at least this summer, or as long as needed for inflation to converge toward the central bank’s target. Of course, this “decision” was widely discounted by markets, so it was Mario Draghi’s press conference that traders were focused on.

The European Central Bank’s next policy ‘decision’ will be made on Thursday, but the focus will undoubtedly be on President Mario Draghi’s press conference.

In yesterday’s article, we noted that the European Central Bank meeting had the potential to be a bit of a non-event, and based on todays market’s reaction, that’s exactly what happened (see “ECB Preview: Dovish Surprise Possible, but Draghi Likely to Leave His Options Open” for more).

The European Central Bank looks set to announce the end of its QE stimulus programme today, as President Mario Draghi and co. have previously indicated.

Amidst the ongoing Brexit hullaballoo (latest headlines suggest Theresa May will survive her no confidence vote as we go to press), tomorrow’s ECB meeting has no doubt snuck up on many FX traders.

Risk assets are bouncing back after a rough holiday-shortened week in the US, with US stock indices gaining around 1% at the open to trade back at Wednesday’s levels. As my colleague Fawad Razaqzada chronicled earlier this morning, weekend progress on a Brexit deal has stabilized sentiment, though there are still plenty of hurdles to clear before a smooth transition is likely. In the FX market, last week’s “safe haven” winners (the JPY, CHF, and USD) are the three weakest major currencies so far today.

As my colleague Fawad Razaqzada noted earlier this morning, there was little reason for the European Central Bank to provide a boost to the euro and that the odds favored a slightly more dovish tone (see “Will ECB Drag EUR/USD Lower?” for more) …and that’s exactly what we’re seeing in the wake of the meeting.

I am trying to think how and why the European Central Bank or its President Mario Draghi might want to give the euro a boost today and can’t find one good reason.

Today promises to be another busy one for the currency markets as investors consider at least four major events. There are three central bank decisions and top tier economic data from the world’s largest economy to keep market participants busy.

In perhaps the least surprising development of the year, the European Central Bank left all its interest rates and its asset purchase program unchanged in this morning’s monetary policy meeting.

The focus is now turning to the European Central Bank, which decided a few moments ago to keep policy unchanged and re-iterated that rates will remain “unchanged at least through summer of 2019.”

Six years to the day after ECB President Mario Draghi vowed to do “whatever it takes” to preserve the euro, the currency union is doing is certainly on stronger footing than it was then.

Notwithstanding President Trump’s daily twitter condemnations (trade partners and the Federal Reserve drew his ire this morning), traders have started to look ahead to next week’s trade.

As my colleague Fawad Razaqzada noted earlier today, the euro spiked briefly after this morning’s ECB meeting before reversing violently back to the downside in a mirror of yesterday’s price action in the US dollar.

Gold faces an important few days as three major central banks announce their respective policy decisions. All bar one is expected to make a rate change and that’s the Federal Reserve today.

The euro is the strongest major currency so far in World Cup kickoff week, perhaps reflecting the fact that three of the four biggest favorites for the tournament hail from the Eurozone...

Although the Federal Reserve is almost certain to raise interest rates next week, it is the European Central Bank which all of a sudden is looking to be the more anticipated meeting.