ECB meeting looms

July 26, 2018

Plenty of activity from around the world today, but it is Europe where we turn our attention.

The EUR/USD surged in late trading after beginning the session reasonably flat. The pair opened at $1.16811 and traded in a tight range for the first few hours of trade. It managed to lift itself up to $1.17113 before tumbling to a low of $1.16631. The rallying then began in earnest and rocketed to highs of $1.17379. It is not far off those highs, currently trading at $1.17341. It was a similar story for the pound, as major currencies took advantage of a weaker dollar. The GBP/USD opened at $1.31397 and was largely flat for most of the session. The pair then dipped in later trading to a low of $1.31312. Like the euro, the pound then bounced back and rallied until it peaked at $1.32002. It is near those highs at present, trading at $1.31961.

The Dow put in another strong performance, on the back of positive US-EU trade talks which placated trade war fears. The Dow opened at 25,219.71 and was quite flat early before falling to a low of 25,111.10 mid-session. It then turned around and surged into the close, reaching a high of 25,472.07 and then closing at 25,464.09. In early morning trading, the Dow had pushed a little higher but then came off those highs as it is currently trading at 25,447.30. The Dax was also buoyed by the trade news as rallied into the close, erasing the losses it had taken earlier. The Dax opened at 12,668.51 and suffered losses for most of the session, tumbling to lows of 12,533.90. During the last few hours of the session however, the Dax bounced back, overcame all of the previous losses and piled on 210 points as it reached highs of 12,743.90. It came off those highs slightly as it closed at 12,731.60.

Markets will be largely focussed on Europe as it releases its interest rate decision, known as the Main Refinancing Rate. The ECB will also be holding a press conference after this decision. While it is not expected to raise rates, it is crucial to hear the commentary from Mario Draghi regarding monetary policy settings and economic outlook for the European continent. The recent US-EU trade talks may bring some more confidence to the ECB. This interest rate decision has the potential to affect the Dax as well as EUR-paired currencies. Other data set for release today includes:

Australia – Import Prices

China – CB Leading Index

Japan – Tokyo Core CPI

Europe – Spanish Unemployment Rate, German GfK Consumer Climate

US – Durable & Core Durable Goods Orders, Unemployment Claims, Goods Trade Balance, Prelim Wholesale Inventories, Natural Gas Storage

 

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