Data Rundown: ECB, Fed Minutes...and Brexit Extension?
Matt Weller, CFA, CMT April 10, 2019 8:55 PM
After a quiet start to the week, market-moving data has finally picked up, with traders keying in on three major events...
After a quiet start to the week, market-moving data has finally picked up, with traders keying in on three major events:
1) This morning’s ECB meeting initially struck traders as dovish, with ECB President Mario Draghi highlighting the potential for inflation to decline in the near term and emphasizing the ongoing need for stimulus. Crucially, Draghi stated that the central bank was “ready to use all instruments… ALL instruments,” prompting some traders to price in an imminent resumption of TLTROs to ease financial conditions.
Despite the initial drop, EUR/USD has reversed back higher through today’s US session and is once again trading marginally higher on the day near 1.1270:
Source: TradingView, FOREX.com
2) The minutes from the March FOMC meeting generally underscored Governor Powell’s dovish press conference, though “several officials noted rate views could shift either way.” Ultimately, a majority of policymakers see rates on hold through 2019 amidst uncertainty over trade and Brexit. It’s worth noting that the Fed is still open to the idea of a potential rate hike toward the end of the year if economic data improves, a prospect the market has almost completely priced out. The greenback ticked marginally higher as the market-implied odds of a rate cut later this year dipped slightly.
3) As of writing, the EU is still deliberating over whether to extend the UK’s Brexit date, though most analysts believe it’s a question of how long the extension will be, not whether there will be one. PM May would prefer a short extension, though some EU members would rather see a longer delay; the natural compromise may be a “flextension,” wherein the UK can opt to leave earlier once a deal is agreed upon. Expect some volatility in the pound this evening, though if the offer comes out as most traders expect (a 6-12 month extension, with the UK given the option to terminate earlier), market movements may be limited.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.