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Anticipation Ripples as ECB Poised for Easing

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EUR

The Euro dropped against rivals amid growing chances of monetary policy easing by the European Central Bank. The awaited monetary policy meeting is happening today, and the bank is widely expected to cut the deposit facility rate by 10 basis points to -0.50%. Furthermore, there are assumptions that the ECB will also resume asset purchases. The recent economic data came out much weaker than expected and signaled that the economic activity in the region is slowing which would urge the bank to act. A press conference by the European Central Bank President Mario Draghi will follow the decision, where the latter will be explaining the reasons behind the decision to the public. The EURUSD is currently trading above $1.10, and the EURAUD is hanging near 1.60.

USD

The dollar index, which measures the greenback against a basket of major currencies climbed to a one-week high of 98.75. DXY received a push higher supported by the falling European currencies, and stronger US data. The Euro tumbled ahead of the European Central Bank monetary policy meeting, where the bank could implement easing measures, and the pound ran into profit-taking orders after a 400+ pips rally. On the other hand, the Producer Price Index nudged higher to 1.8% in August. Market participants are looking forward to the Consumer Price Index figures release later today. The US 10-year yields hovered held steady above 1.70%, and the USDJPY extended gains rallying to a fresh six-week high of 108.17.

Equities

Major US stock index futures extended rally adding to their gains supported by optimism over trade between China and the United States. The US president Donald Trump postponed the implementation of the recent tariffs two weeks till October 15, and China responded by considering to increase US farm imports ahead of planned talks. The Dow Jones Industrial Average rose to a seven-week high of 27320, the S&P500 advanced to 3017, and Nasdaq futures rallied to 7962.

Metals

Gold prices edged slightly higher ahead of the European trading session as investors expect the ECB to ease the monetary policy in today's meeting. The price of a gold ounce traded rose to $1504, the price of a silver ounce surged to $18.19, and palladium soared to a two-month high of $1595.

Oil

Oil prices plunged despite a drop in US crude inventories. The market is still digesting Trump's decision in firing John Bolton, which could change the attitude of the US towards Iran and ease tensions further. The US Energy Information Administration reported a fall of 6.912 million barrels in crude inventories last week. Market participants are looking forward to the OPEC+ Joint Ministerial Monitoring Committee meeting in Abu Dhabi today. The West Texas Intermediate Crude futures dropped to $55.59, and the Brent futures tumbled to $60.51.

Major Economic Events

GMT Country Event Expectation Previous

11:45

EU

Deposit Facility Rate (Sep)

-0.50%

-0.40%

11:45

EU

ECB Interest Rate Decision (Sep)

0.00%

0.00%

12:30

EU

ECB President Draghi Speaks

 

 

12:30

US

Core CPI (MoM) (Aug)

0.2%

0.3%

18:00

US

Federal Budget Balance (Aug)

-160.5

-120.0


Disclaimer
 

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