ECB Monetary Policy Meeting and Press Conference
Dow Jones 24108 / Dax 12460
UK: No Data.
EZ: ECB Minimum Bid Rate at 02:45 pm. Followed by ECB Press Conference at 03:30 pm. (Beirut Time)
North America: U.S. Core Durable Goods Orders at 03:30 pm. (Beirut Time)
The dollar recorded multi-month highs against many of the major currencies. USD/JPY crossed the 109.00 level highest in 2 months, the NZD/USD slipped to a 3 months and the AUD/USD dropped to its lowest level in 4 months. The Euro is trading sharply lower ahead of the European Central Bank’s monetary policy meeting. The equity market is seesawing with no short-term direct trend outlook. Good earnings season whipped out by a strong dollar shooting to a multi months high supported by the spike in 10 year treasury yields.
No policy changes are expected today from the ECB monetary policy meeting, the euro is bound to move on the back of Mario Draghi’s comments. For the last 2 months the economic indicators have deteriorated in the EZ. On the other hand, there are some signs of stability, inflation is rising, labor market conditions improved and equity market stabilized in April. Draghi will be extremely cautious, will emphasize that there is no rate increase this year. No changes from March statement are expected. If in his press conference expressed worries about the latest economic data numbers the Euro may fall under the 1.2117 level. However if he sounded a bit optimistic, Euro could bounce back up to 1.2300. Until now the 3 months range is still intact, today’s event might affect this consolidation.
The U.S. data won’t have much impact today unless the core durable goods orders register a better than expected number by far. Instead, the continuous strength in yields will keep supporting a strong dollar.
Cable is consolidating following the key break below 1.4000 on Monday. The pair is trading below the 50-day SMA and the downtrend is firmly intact. P.M. May was dealt with her third defeat in less than a week in the Upper House over her Brexit plans. Although the Lower House could overturn these decisions, they highlight the ongoing resistance to May’s Brexit strategy and raise the odds of a soft Brexit. It may be a matter of time before we see further weakness. Support at 1.3915 is holding for now a close below this level will lead to the next level at 1.3710. First resistance at 1.4048, second at 1.4173.