Market was waiting Super Thursday
European and Asian stocks, as well as S&P futures, were little changed ahead of “Super Thursday’s” events which include the U.K. general election, Comey’s testimony, and the ECB policy decision. That, however, may change following a Bloomberg News report that the ECB is set to cut inflation forecasts through 2019 due to weaker energy prices, suggesting the “hawkish” ECB announcement some had expected tomorrow has been postponed.
According to the ECB draft projections, consumer prices would grow roughly around 1.5% each year in 2017, 2018, and 2019. At the same time, the ECB said to revise up GDP forecasts by around 0.1% each year.
As the European session wore on the success of the Spanish bail in the process pushed shares in many major banks higher, supporting a recovery for Madrid’s stock market and fending off this week’s broadly weaker mood. But as Reuters notes, the rescue also underlines the risks to growth, banking and government debt burdens that are likely to delay a major switch in language and policy direction by the European Central Bank at its meeting today.
In currencies, there is not a huge amount of activity in the FX markets other than pushing the USD lower, notably against the JPY as the spot rate eyes a move on 109.00. Dealers report stops through this level, and a breach may well trigger a move towards the 2017 lows ahead of 108.00 by the week. The EURUSD has dropped significantly on the ECB draft which said to cut inflation outlook through 2019. Thursday evening sees the market looking to ride the wave of an anticipated GBP rally, no matter how long it lasts. Risks are skewed to the downside, however, with the Brexit factor soon to return once the election dust has settled.
In commodities, there is also little of note to drive the commodity markets today apart from the DoE report later today. That said, the higher than expected draw down in the APIs did little other than stabilizing WTI and Brent inside the familiar territory.
EURUSD – The common currency took a heavy right cross forcing the common currency to drop by -0.65% from 1.1276 towards a day low and Friday’s low of 1.1203. The ECB’s policy statement today is the awaited news on this pair.
GBPUSD – The cable rose to 1.2978 as investors are positioning themselves for today’s Elections which latest polls show a hung parliament is quite in the books.
USDJPY – The Yen is holding at the 233-DMA with a Fibonacci level supporting it as well at 109.20. The continued downward movement of the pair is aided by the demand for safe havens in the current uncertain atmosphere the covers the markets.
EURGBP – The negative RSI divergence between the price movements and RSI has put a lid on any kind of further upside movement. The next target for this pair is the 0.8670.
AUDUSD – The Aussie is still taking advantage of the increase in GDP as it holds the gains with a month high at 0.7565.
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