Saturday March 5, 2016 - 16:02:19 GMT
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What To Expect From The ECB Thorsday
John M. Bland, MBA, CTA
Key ECB Decision Thursday
The major focus of the week ahead will be on the European Central Bank policy decision on Thursday. Forex markets were surprised by a report that the ECB is likely to disappoint market expectations because no consensus on policy has been reached. Reportedly, all that has been agreed upon is a lowering of the Bank Deposit Rate (currently -0.20%). If accurate, this story explains a mysterious two-day rally in the EURUSD. If this was a leak, it might have been designed to lower market expectations for the meeting. One disappointing thing about the ECB is the influence of national politics on voting. As for the value of the Euro, although forex policy is not in their portfolio, it is fairly clear that a weakening of the currency would not see the central bank shed any tears. On the flip side, the latest week has seen U.S. Fed Funds futures pricing in increased odds of a Federal Reserve policy tightening later this year.
Current Market Conditions
Conditions in the forex markets have changed a lot in the past week. The lead EURUSD relationship went bid in the latest week ahead of the the release of the February employment report. This was strange since strong figures had been expected, and in fact were released. It appears that the EURUSD was in demand ahead of expectations that the ECB would not be as dovish this week as originally believed. Markets are now trying to figure out what the new trading range the pair would now settle into. Other central banks will be making policy decisions in an otherwise quiet time for key data.
WEEKLY HIGH IMPACT NEWS:
23:50 JP- GDP
10:00 EZ- GDP
15:00 CA- Bank of Canada Decision
20:00 NZ- RBNZ Decision
12:45 EZ- ECB Decision
13:30 US- Weekly Jobless
13:30 CA- Employment
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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