Filipino Forex Traders around the world, focused on the upcoming U.S. inflation data and a European Central Bank (ECB) policy decision, both due later in the day. For the time being, global equities are hanging around an all-time high.
The US dollar shrugs off weaker Treasury yields. The ECB eyed for economic outlook. To keep the currency afloat, the US CPI needs to come in higher than expected.
DOLLAR EXPECTED TO FALL IF US INFLATION EASES
The dollar will probably fall if data on Thursday show U.S. inflation eased in May, Oanda says.
“The inflation trade has tended to have short legs in months past, and I believe we would need to see the month-on-month consumer price index for May print at or above last month’s 0.80% increase to give it more momentum,” Oanda analyst Jeffrey Halley says.
Anything less than that would prompt investors to buy everything expect the dollar, he says.
U.S. bonds and equities would rally along with commodities and precious metals, while the dollar would depreciate, according to Halley.
How the ECB may move the Euro?
The European Central Bank plans to post its monetary policy statement together with the interest rate tonight at 7:45 pm.
Pairs to Trade:
EUR/USD
EUR/JPY
EUR/GBP
👉 Analysts don’t expect any changes to the interest rate, which is currently held at 0%. What is more important is the reaction of the bank to stabilizing economic conditions and higher inflation. While the ECB projected inflation at 4% this year, the actual rate overshot the forecast. As a result, the bank may revise its predictions.
👉 Another thing the ECB may draw our attention to is the possible tapering of the ECB’s pandemic emergency purchase program (PEPP).
👉 Analysts expect that the bank will try to avoid discussions on this topic as the Eurozone is still far from a recovery.
How to trade on the ECB Interest Rate Decision?
👉 The main thing we recommend you to follow is connected with an extension of the pandemic emergency purchase program.
👉 While the statement itself may avoid this question, ECB President Christine Lagarde may provide remarks on this topic during the Press Conference at 8:30 pm tonight.
↗️ If the ECB is optimistic, the euro will strengthen;
↘️ If the ECB is uncertain or cautious, the euro will go down.
Meanwhile, it was a calm and quite Trading session yesterday. Not much movement was made as traders were cautious ahead of key events today such as U.S. CPI data, jobless claims and the ECB meeting.
Bank of Canada: Maintains Forward Guidance On Path For Overnight Interest Rate
The Bank of Canada held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which continues at a target pace of $3 billion per week.
With COVID-19 cases falling in many countries and vaccine coverage rising, global economic activity is picking up. Growth remains uneven across regions, however. The US is experiencing a strong consumer-driven recovery and a rebound is beginning to take shape in Europe.
Financial conditions remain highly accommodative, reflected in broadly higher asset prices.
Commodity prices have risen further, notably oil, and the Canadian dollar has seen a further appreciation.
#DailyBrief | Things traders need to know today:
Thursday, June 10, 2021
👉 Traders are waiting to see if the upcoming U.S. inflation print changes perceptions of when the Federal Reserve might begin talks about tapering asset purchases. Global equities for now are hovering around an all-time high. US equities decreased Wednesday, with the financial sector moving lower on falling Treasury rates. US CPI data is expected to be +4.7% YoY in May. European and Asian indices were closed mixed.
👉 The offshore yuan climbed after the Chinese and U.S. commerce ministers agreed to push forward trade and investment links in their first call since the start of President Joe Biden’s administration. Separately, Biden revoked Trump-era bans on TikTok and WeChat. He ordered a review of software apps from foreign adversaries and action against those that pose a security risk.
👉 The US dollar index (USDX) remained above 90 despite the yield on 10-year Treasury slumping to 1.48%, the lowest level since March.
👉 Traders are awaiting the European Central Bank policy decision and a Group of Seven summit, which is set to vow delivery of at least 1 billion extra vaccine doses over the next year to help cover 80% of the world’s adult population. EUR rose to 1.2178 ahead of the ECB policy announcement tonight. Economic projections are also scheduled for release today.
👉 GBP fell to 1.4112 on worries of the fast spreading delta variant.
👉 AUD was slightly lower at 0.7731, sitting above 100-day SMA and struggling for direction.
👉 USD/JPY rose 14pips to 109.64. Japan’s central bank reported that the country’s M2 money stock increased 7.9% on year in May (+8.4% expected).
👉 NZD dipped to 0.7177.
👉 USDCAD was steady at 1.2109 after the BoC meeting where no change was made.
👉 Gold dropped for a second session to $1,888.49.
👉 WTI crude (SpotCrude) hitting a multi-year high of 70.60 before sliding. The U.S. Energy Department reported that the latest crude-oil stockpiles dropped 5.24 million barrels, more than a reduction of 2.89 million barrels expected.
👉 Bitcoin rebounded over 8% to levels above $36,000 after El Salvador passed a law to make Bitcoin legal tender, the first country in the world to do so. Ether climbed back to levels above $2,500.
Telegram VIP Room TRADE SIGNAL SUMMARY:
Wednesday, June 9, 2021
EUR/USD ⬇️SELL⬇️ @ 1.21800
GBP/NZD ⬆️BUY⬆️ @ 1.96600
GBP/AUD ⬆️BUY⬆️ @ 1.82800
GBP/JPY ⬇️SELL⬇️ @ 155.000
USD/CAD ⬆️BUY⬆️ @ 1.21000
NZD/CAD ⬇️SELL⬇️ @ 0.8710
EUR/AUD ⬆️BUY⬆️ @ 1.57400
AUD/USD ⬇️SELL⬇️ @ 0.77430
