empty
 
 
13.09.2019 08:59 AM
Euro remains in range after ECB meeting, pound takes a break

Core inflation in the United States reached 2.4% y/y in August, which was the highest level in 10 years. Growth exceeded forecasts despite the fact that the forecasts were quite optimistic.

This image is no longer relevant

First of all, the growth of price is supported by the services sector, while commodity components show noticeably weaker dynamics. If we proceed from the fact that Trump's war for higher import tariffs will have the expected effect, then we can assume an increase in commodity prices. These considerations should support inflationary expectations. But the oddity is that Tips' 5-year inflation-protected bond yields are still around a 12-month low, indicating strong business skepticism about inflationary expectations.

Apparently, markets do not expect a hawkish bias from the upcoming FOMC meeting. So, the demand for risky assets will continue with high probability next week.

EURUSD pair

The ECB kept the base rate at zero and at the same time lowered the rate on deposits by 0.1%, which is already expected at the meeting that ended on Thursday. The asset repurchase program has also been resumed, but monthly purchases will total only 20 billion euros per month, while 30 or even 40 billion was expected.

The euro reacted to the outcome of the meeting with growth as the ECB's decision looked less dovish as a whole than predicted, but then it went down.

After Mario Draghi noted that the likelihood of a recession is low, the euro began to move up, having recovered all the losses. Indeed, despite the fact that the yield of 10-year-old Bundes is below zero, the spread between 2- and 10-year-old bonds is still above zero, unlike American Treasuries, and consumer confidence, although it is in a long-term downtrend, in the last two year shows the reverse dynamics.

This image is no longer relevant

In fact, the euro did not receive directions to the direction after the ECB meeting. The buyback program has nevertheless been resumed, and relatively small volumes may be increased at any time if circumstances so require. The fears of relatively low inflation are largely due to the low price of energy, Draghi emphasized at a press conference. Meanwhile, core inflation is still high and is predicted to drop to 1.5% in 2021.

In general, the ECB gave a neutral characterization of the state of affairs in the eurozone, but most regional banks are preparing for a darker scenario. In particular, Nordea Bank believes that the ECB will reduce the deposit rate by another 10p in December and expand its asset purchase program to 40 billion per month. DanskeBank notes the obvious risks that the market will come to the conclusion that the measures taken are not enough to revive inflationary expectations and growth, which will then proceed from the need to expand the incentive program that confirms the position of Nordea. Well, the head of Deutsche Bank Christian Seving did say that "... in the long term, negative rates lead to the collapse of the financial system ...", European banks will receive losses of hundreds of millions of euros this year only in the reduction of the deposit rate.

In general, it is currently necessary to proceed from the fact that the ECB was able to launch an incentive program while maintaining the euro quotes at the same level. Despite the chaotic movements of the euro, it did not go beyond the horizontal boundary of 1.0920-1.1085, and expectations remain neutral as of Friday morning. Before the Fed meeting, the euro will continue to trade in a range and an attempt to go up will most likely be stopped at the border of the long-term channel at 1.11.

GBP/USD pair

The pause in the political show regarding Brexit and the lack of significant macroeconomic news contribute to reducing the pound's volatility. A weak upward trend remains and the pound will tend to move towards the area of 1.2380/2430. There are no reasons for a downward turn yet.

Kuvat Raharjo,
InstaForex के विश्लेषणात्मक विशेषज्ञ
© 2007-2024
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    कॉन्टेस्ट में हिस्सा लें
  • चैन्सी डिपॉजिट
    $ 3,000 के साथ अपना खाता जमा करें और प्राप्त करें $8000 अधिक!
    में मार्च हम आकर्षित करते हैं $8000 चैंसी डिपॉज़िट में
    ट्रेडिंग अकाउंट में $ 3,000 जमा करके जीतने का अवसर प्राप्त करें इस शर्त को पूरा करके आप प्रतियोगिता में भाग ले सकते हैं
    कॉन्टेस्ट में हिस्सा लें
  • ट्रेड वाइज़, विन डिवाइस
    कम से कम $500 के साथ अपने खाते में टॉप अप करें, कॉन्टेस्ट के लिए साइन अप करें और मोबाइल डिवाइस जीतने का मौका पाएं।
    कॉन्टेस्ट में हिस्सा लें
  • 100% बोनस
    अपनी जमा राशि पर 100% बोनस प्राप्त करने का आपका अनूठा अवसर
    बोनस पायें
  • 55% बोनस
    अपनी प्रत्येक डिपॉजिट पर 55% बोनस के लिए आवेदन करें
    बोनस पायें
  • 30% बोनस
    हर बार खाता टॉप अप करने पर 30% बोनस प्राप्त करें
    बोनस पायें

अनुशंसित लेख

अभी बात नहीं कर सकते?
अपना प्रश्न पूछें बातचीत.
Widget callback