Markets

Euro, Sentiment Trends Hinge on ECB Readiness to Boost Stimulus

DailyFX.com -

Talking Points:

  • ECB unlikely to deliver policy change at today's announcement
  • Draghi presser in focus for guidance on future easing potential
  • Markets likely to be disappointed absent strong dovish rhetoric

The monetary policy announcement from the European Central Bank headlines the economic calendar. Economists expect officials will leave the current settings unchanged this time around. Traders' priced-in bets implied in EONIA futures agree. This makes sense: the ECB announced forceful stimulus expansion last month and will likely want to monitor progress for at least a few months before deciding on whether further measures are necessary.

With that in mind, comments from ECB President Mario Draghi at the press conference following the announcement may nonetheless trigger volatility. The Euro rallied even as the ECB eased further last month as Mr Draghi appeared to close the door for further accommodation, implying the central bank was out of ammunition. Subsequent commentary clarified that he was referring to a shift away from deposit rate cuts toward other measures, but this seemed to be mostly ignored.

Today's meeting offers Draghi an opportunity to formally clarify forward guidance. If he uses it to unambiguously assert that the ECB is well-armed to deliver greater easing and is prepared to do it on short notice if necessary, the Euro is likely to weaken. Risk appetite may also improve, sending the Australian, Canadian and New Zealand Dollars higher alongside stock prices. The absence of a forceful dovish message may leave investors disappointed however, triggering the opposite results.

Are FXCM traders buying or selling the Euro ahead of the ECB rate decision? Find out here !

Asia Session

GMT CCY EVENT ACT EXP PREV
22:00 NZD ANZ Job Advertisements (MoM) (MAR) 2.9% - 1.2%
22:45 NZD Net Migration SA (MAR) 5330 - 6000
01:00 NZD ANZ Consumer Confidence Index (APR) 120 - 118
01:00 NZD ANZ Consumer Confidence (MoM) (APR) 1.7% - -1.4%
01:30 AUD NAB Business Confidence (1Q) 4 - 5
01:30 AUD RBA FX Transactions Government (MAR) -978m - -496m
01:30 AUD RBA FX Transactions Market (MAR) 945m - 476m
01:30 AUD RBA FX Transactions Other (MAR) 44m - 41m
02:00 CNY Bloomberg April China Economic Survey (APR) - - -
03:00 NZD Credit Card Spending (MoM) (MAR) -1.1% - -0.5%
03:00 NZD Credit Card Spending (YoY) (MAR) 4.8% - 7.3%
05:00 JPY Supermarket Sales (YoY) (MAR) -0.3% - 3.4%

European Session

GMT CCY EVENT EXP PREV IMPACT
06:00 CHF Trade Balance (MAR) - 4.07b Low
06:00 CHF Exports Real (MoM) (MAR) - 2.8% Low
06:00 CHF Imports Real (MoM) (MAR) - -2.0% Low
07:00 CHF Money Supply M3 (YoY) (MAR) - 1.7% Low
08:30 GBP Retail Sales Ex Auto Fuel (MoM) (MAR) -0.3% -0.2% Medium
08:30 GBP Retail Sales Ex Auto Fuel (YoY) (MAR) 3.8% 4.1% Medium
08:30 GBP Retail Sales Inc Auto Fuel (MoM) (MAR) -0.1% -0.4% Medium
08:30 GBP Retail Sales Inc Auto Fuel (YoY) (MAR) 4.4% 3.8% Medium
08:30 GBP Public Finances (PSNCR) (MAR) - 0.1b Low
08:30 GBP Central Government NCR (MAR) - -0.5b Low
08:30 GBP Public Sector Net Borrowing (MAR) 5.4b 6.5b Low
08:30 GBP PSNB ex Banking Groups (MAR) 6.0b 7.1b Low
09:00 EUR Eurozone Gov't Debt/GDP Ratio 2015 - 92.1% Low
11:45 EUR ECB Main Refinancing Rate (APR 21) 0.00% 0.00% High
11:45 EUR ECB Deposit Facility Rate (APR 21) -0.40% -0.40% High
11:45 EUR ECB Marginal Lending Facility (APR 21) 0.25% 0.25% High
12:30 EUR ECB's Draghi Holds Press Conference - - High

Critical Levels

CCY Supp 3 Supp 2 Supp 1 Pivot Point Res 1 Res 2 Res 3
EUR/USD 1.1131 1.1228 1.1263 1.1325 1.1360 1.1422 1.1519
GBP/USD 1.4197 1.4277 1.4305 1.4357 1.4385 1.4437 1.4517

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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