No surprises from ECB or Draghi
FX Trader, Loonieviews.net
FX traders were hoping for more clarity from the European Central Bank or its president, Mario Draghi, on the pace of interest rate hikes in the Eurozone. They didn’t get it. The ECB did not deviate from the previous meeting’s message. Non-standard monetary policy measures will terminate at the end of December, and Eurozone interest rates aren’t going anywhere until the summer of 2019.
Eurozone equity indices climbed on the news. Wall Street wasn’t quite as lucky. Facebook’s (FB: NASDAQ) face-plant (its share dropped 18.19% from yesterday’s close after the company forecast slowing revenue growth in the coming quarters. The plunge helped drag the Nasdaq down 1.14% in early trading. The S&P 500 is down just 0.28%. The success of the Trump/Juncker meeting has underpinned the DJIA which has gained 0.58% this morning.
EURUSD traders who had bought the single currency on misguided hopes that Mario Draghi would be more specific as to the timing of a rate increase bailed out of their positions. EURUSD dropped from 1.1728 at the New York open to 1.1681 at 14:00 GMT.
The dip in EURUSD has dragged down the rest of the G-10 currency majors, led by a plunge in AUDUSD. This morning’s US data supported the greenback. June durable goods orders rose 1.0%, well above the -0.3% drop in May, but below the forecast for a 3.0% gain. Initial jobless claims were 217,000.
Traders are looking ahead to Friday’s US Q2 GDP report. Earlier this week, President Trump was rumoured to have leaked a result in the 5.0% area. The forecast is for a gain of 4.1%, and many market participants are expecting a forecast-beating result.
EURUSD is trading erratically inside a 1.1650-1.1750 range. A break either side will yield 0.0060 points in either direction.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.