News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • the brooding music when they get to Roxxcart in episode 2? enthralling
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 1.13% Gold: 0.60% Oil - US Crude: -0.78% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/8rSA2ohup8
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/Yh0PRRRzYl
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.09% 🇪🇺EUR: 0.08% 🇨🇦CAD: 0.06% 🇨🇭CHF: 0.02% 🇯🇵JPY: 0.01% 🇳🇿NZD: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/vbRu3EprVx
  • maybe I’m biased as a former violinist but wow is @filmmusicholt’s score in #Loki unbelievable.
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Gold are long at 83.82%, while traders in France 40 are at opposite extremes with 78.68%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Ur8BEXEQew
  • Natural gas spot prices have been on the rise, recapturing a key trendline, following the EIA’s Short-Term Energy Outlook. Where can prices head from here? Find out from @FxWestwater here:https://t.co/yK48nZD1ag https://t.co/Rbs94oGSC7
  • USD/CHF Falling Wedge Breakout Nears Target, Trend to Continue? - #USDCHF chart https://t.co/vgrZHTjQnj
  • EUR/USD IG Client Sentiment: Our data shows traders are now at their most net-long EUR/USD since Mar 26 when EUR/USD traded near 1.18. A contrarian view of crowd sentiment points to EUR/USD weakness. https://www.dailyfx.com/sentiment https://t.co/G3PTMBx4s5
  • (APAC Stocks Briefing) Dow Jones, Nasdaq 100 Outlook: Reflationary Trade Dissipating, Nikkei 225 Eyes BoJ #DowJones #NASDAQ #Nikkei225 https://www.dailyfx.com/forex/market_alert/2021/06/18/Dow-Jones-Nasdaq-100-Outlook-Reflationary-Trade-Dissipating-Nikkei-225-Eyes-BoJ.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/xkZCw2sSFJ
ECB and Fed Monetary Shifts Have Outsized Global Influence

ECB and Fed Monetary Shifts Have Outsized Global Influence

Nick Cawley, Strategist

USD and EUR Weighed on by Central Bank Monetary Policy U-Turns

  • Fed and ECB policy decisions have global consequences.
  • Further policy loosening will steer USD and EUR lower.

Q3 2019 USD and EUR Forecasts and Top Trading Opportunities

Lower for Longer as Central Banks Continue to Ease

A new report by ratings agency FitchBroadest Shift in Global Monetary Policy Direction Since 2009 – highlights the recent U-turns made by global central banks as economies across the world continue to battle with tepid growth and below target inflation. The report highlights a ‘pronounced shift in the balance of policy direction across geographies in the last six months’ with more than a third of the central banks, in the BIS database, easing over the last six months. This monetary shift, from tightening to loosening, is due to the deterioration in global growth prospects, rising concern over trade policies, a slump in manufacturing and trade and ‘muted movements in global inflation trends over the last 12-18 months.’ The Fitch report highlights the Fed’s policy U-turn towards easing in early 2019 as having had a global impact, while the recent ECB signals of renewed loosening, after having stopped bond purchases in December 2018, ‘could also have had a strong impact on global policy settings.’

Hawkish vs Dovish: How Monetary Policy Affects FX Trading

As central banks ease, their currencies, in normal circumstances, weaken as the interest rate differential against other currencies narrows. However as other central banks are now cutting rates in lock-step, the overall differential between various currency pairs remain little changed. With major central banks looking to weaken their currencies further, to try and negate perceived and real trade imbalances, the race to the bottom continues. It remains to be seen if further monetary loosening will have the desired effect or if new, extraordinary policies need to be unleashed to prevent the current global downturn.

For FX traders this means a renewed focus on central banks and policy member speeches. Currency pairs will see more volatility when central banks do not react as expected or if policy members unexpectedly reveal revised forecasts, internal disagreements and fresh stimulus measures.

The DailyFX Calendar keeps you fully informed of all central bank meetings and data releases while the DFX website reports up-to-the minute developments and news across a range of currencies.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on interest rates and have central banks finished?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES