ECB delivered, but signals no additional easing

The ECB did deliver more than the market expected yesterday, but since Draghi did not signal further easing in the press conference, the market bounced back and the EUR printed 2-week highs against most peers (1.1218 in EUR/USD), which probably wasn’t the reaction the central bank had been aiming for. Despite, the outlook for no additional easing, main indices in the EU and the US closed in positive. In commodities, oil experienced a small pull-back, but remains in an uptrend and in precious metals, gold rose and has made a daily bullish engulfing pattern, which could signal additional upside.

In Asia, stocks advanced on a stronger CNY fixing, which reached its highest level since December 30th (USD/CNY reference rate down 222pips to 6.4905.). The Nikkei was little affected by weaker than expected Manufacturing Conditions, which came out at -7.9 vs. 4.2 expected and 3.8 prior.

This morning, we’ve seen the Italian Industrial Production coming out way stronger than expected, but lower than expected Spanish inflation figures are offsetting the optimism. UK Trade Balance beat expectations and coming closer to the UK referendum on June 23rd, we are likely to see volatility in GBP-denominated assets pick up. Hence it would be an idea looking into some long volatility-plays in options. Cable is continuing to recover and closed yesterday above the 50% retracement in the recent wave, which gives scope for a test of next layer of resistance at the 1.4350-area.

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Later today, we have the February Employment figures from Canada, where the unemployment figure is expected to come out unchanged at 7.2% with an expected employment change of 9.0k compared to -5.7k in January. At the same time, the US Import and Export Prices are being released, so there is a chance of a double-whammy in USD/CAD. The pair which is highly correlated with Crude oil has since January, where the pair printed multi-year highs at 1.4690, been on the offer and has currently found support around the 200-day Simple Moving Average, which hasn’t been visited since September 2014. A weekly close below would also confirm that the 50% retracement in the recent wave has been broken with current support at 1.3225 before 1.3195 and then 1.3080. Resistance at 1.3430 before the 1.35-figure.

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