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ECB policy meeting the main event on the agenda in the session ahead

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ECB to change its forward guidance to align with the strategy review

ECB

Tuesday’s rebound stuck in trading yesterday as the market sought calmer tones, with 10-year Treasury yields rebounding back to 1.28% and is staying thereabouts now.

There is still plenty of debate on the inflation topic, COVID-19 fears, and whether or not this is just a case of Occam’s razor i.e. yields are trending lower in the long-term. But there are no straightforward answers just yet going into the FOMC meeting next week.

Oil also saw a solid rebound yesterday, bouncing off key technical support levels this week to move to $70 before a bit of a pullback today – down 0.4% to $70.03.

The yen is mildly higher while the loonie and kiwi are a touch softer, though nothing that stands out all too much as we look towards European trading.

The euro will be a focus point ahead of the ECB meeting later but the central bank is unlikely to offer much of anything new besides some tweaks to its forward guidance to match up with the latest strategy review findings.

1000 GMT – UK July CBI trends total orders, selling prices

Prior release can be found here. The CBI readings are a survey on manufacturers to rate the level of volume for orders expected during the next 3 months.

1145 GMT – ECB announces its July monetary policy decision

The prior meeting decision can be found here. Overall policy language should remain the same with the outlook to the economy also expected to keep more balanced as per the June meeting. The only real tweaks to the statement will come from changes to align inflation targeting to what they have reported in the strategy review. As such, it should be a relative non-event for the most part but just be wary in any case.

1230 GMT – ECB president Lagarde press conference

The market will scan for clues from Lagarde about PEPP purchases ahead of the supposed September decision where the ECB might announce changes to the programme. Besides that, her tone will also be one to take note of in case it skews towards any added optimism or pessimism on the euro area outlook and inflation in general.

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

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