Draghi and the ECB Put the EUR in the SpotlightDraghi and the ECB will need to deliver to offset the effects of weak stats and mixed earnings. How far will the ECB be willing to go…
Earlier in the Day:
It was another quiet Asian session this morning, with no material stats to provide direction through the early part of the day.
A lack of stats left the markets to respond further to the outcome of the UK leadership race and to corporate earnings.
The markets also prepared for today’s ECB monetary policy decision and press conference, where Draghi et al are expected to cut rates and pin back the EUR.
For the Majors
In the Asian equity markets, the majors found support early on. The ASX200 led the way with a 0.61% gain on the day, with the Nikkei ending the day up by 0.22%. At the time of writing, the CSI300 and Hang Seng were up by 0.46% and by 0.30% respectively.
The Day Ahead:
For the EUR
It’s a particularly busy day ahead for the EUR, with key stats due out including Germany’s IFO Business Climate figures. Jobseeker numbers out of France will have less influence on the day.
While we can expect the IFO numbers to have an impact, the key driver will be the ECB monetary policy statement and press conference.
The ECB avoided jawboning the EUR last month, but with the FED about to cut interest rates, Draghi is expected to deliver further easing later today.
Trade continues to be an issue and Germany’s manufacturing sector has been in contraction throughout the year. With China’s economy slowing and the U.S – China trade war ongoing, central banks will have just cause to follow the FED’s moves.
From outside of the Eurozone, the result of the UK leadership race will also influence. The Boris Johnson victory is expected to raise the prospects of a no-deal Brexit that would also be a negative for the EUR.
At the time of writing, the EUR was down by 0.04% to $1.1135.
For the Pound
There are no material stats due out today, leaving the Pound firmly in the hand of the UK Parliament.
Any chatter from the new British Prime Minister Boris Johnson will have an impact on the day.
At the time of writing, the Pound was down by 0.06% to $1.2476.
Across the Pond
It’s a relatively busy day ahead. Key stats due out of the U.S include June durable goods orders and the weekly jobless claims figures.
While we would expect the core durable goods orders to be the key driver, the Dollar would be more sensitive to the jobless claims figures. We’ve got the FED interest rate decision and nonfarm payrolls next week. Any unexpected jump in claims would weigh more heavily than normal on the Greenback.
Outside of the stats, there’s also Trump and the U.S – China trade war to consider and Iran.
At the time of writing, the Dollar Spot Index was down 0.01% at 97.723.
For the Loonie
It’s yet another quiet day ahead, with no material stats due out of Canada. A lack of stats continues to leave the Loonie in the hands of crude oil prices.
Monetary policy easing by the likes of the ECB and FED in support of growth would support crude oil prices.
The Loonie was up 0.08% at C$1.3132, against the U.S Dollar, at the time of writing.