ECB decision day

The ECB’s interest rate decision is set to occur later on today and may be the highlight of the day. The majority of market participants currently anticipate the bank to cut rates by 25 basis points, with EUR OIS currently implying 97.6% probability for such a scenario to occur. Hence, we turn our attention to the bank’s accompanying statement and ECB President Lagarde’s press conference following the decision. In our view, with President Trump seemingly going through with his tariff threats on Canada and Mexico, the ECB may be concerned about the ‘global economic outlook’, as Europe also appears to be a target of the US’s tariff ambitions. Thus, we would not be surprised to see the ECB raise concerns about the possible impact of a trade war with the US. However, Germany’s and the Zone’s preliminary HICP rates for February which were released last week, came in hotter than expected and could thus dampen the bank’s confidence to continue on their rate-cutting cycle, as inflation appears to be stubborn. Overall, we would not be surprised to see the bank implying that they may require further information before continuing on their rate cutting cycle, which in turn may be perceived as hawkish in nature and could thus aid the EUR. On the other hand, should the accompanying statement and ECB Lagarde’s press conference be perceived as dovish in nature i.e implying further rate cuts, it could instead weigh on the common currency.In the US, the ADP Non-Farm employment change figure for February was released yesterday. The figure came in significantly lower than expected at 77k versus 141k and even lower than the prior figure of 186k. The figure may imply a loosening labour market, which could weigh on the dollar. However, that story could change with the release of the US Employment data on Friday.

EUR/USD appears to be moving in an upwards fashion. We opt for a bullish outlook for the pair and supporting our case is the RSI indicator which currently registers a figure near 70 implying a strong bullish market sentiment. Yet the pair appears to have exceeded the upper bound of the Bollinger bands which may imply that the pair is due a correction to lower ground. Nonetheless, for our bullish outlook to continue we would require a clear break above the 1.0880 (R1) resistance line with the next possible target for the bulls being the 1.1040 (R2) resistance level. On the flip side for a sideways bias we would require the pair to remain confined between the 1.0625 (S1) support level and the 1.0880 (R1) resistance line. Lastly, for a bearish outlook we would require a break below the 1.0625 (S1) support level with the next possible tarbget for the bears being the 1.0460 (S2) support line.

GBP/USD appears to be moving in an upwards fashion, with the pair potentially taking aim for our 1.2985 (R1) resistance line. We opt for a bullish outlook for the pair and supporting our case is the RSI indicator which currently registers a figure near 70 implying a strong bullish market sentiment. Yet, the pair is currently above the upper bound of the Bollinger bands and could thus also imply that the pair may due a correction to lower ground. Nevertheless, for our bullish outlook to continue, we would require a clear break above the 1.2985 (R1) resistance line, with the next possible target for the bulls being the 1.3155 (R2) resistance level. On the flip side for a sideways bias we would require the pair to remain confined between the 1.2770 (S1) support level and the 1.2985 (R1) resistance line. Lastly, for a bearish outlook we would require a clear break below the 1.2770 (S1) support level with the next possible target for the bulls being the 1.2555 (S2) support line.

その他の注目材料

Today we get Sweden’s preliminary CPI rate and the UK’s composite PMI figure both for February, the US initial weekly jobless claims figure, followed by Canada’s trade data for January and Canada’s Ivey PMI figure for February. On a monetary level we note the interest rate decisions by the CBT, ECB and the speeches by Philadelphia Fed President Harker, ECB President Lagarde and Fed Board Governor Waller. In tomorrow’s Asian session, we note the speech by Atlanta Fed President Bostic.