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.

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
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Breaking news

EU Official says UK trade deal imminent and expected by the end of the weekend barring last minute breakdown in talks

Euro May Fall as the ECB Stays Cautious Despite Economic Upturn

Euro May Fall as the ECB Stays Cautious Despite Economic Upturn

2020-01-23 08:00:00
Ilya Spivak, Head Strategist, APAC
Share:

EURO, ECB, LAGARDE, CORONAVIRUS – TALKING POINTS:

  • ECB expected to keep policy mix as-is, tone of commentary in focus
  • Euro may fall if Lagarde sounds cautious despite economic upturn
  • Any details on the upcoming policy review will be closely watched

All eyes are on a monetary policy announcement from the European Central Bank (ECB) on Thursday. No changes to benchmark rates or QE asset purchases are expected but the follow-on press conference with President Christine Lagarde will command attention as markets try to divine the way forward.

Regional PMI surveys suggest the pace of manufacturing- and service-sector activity growth – while still muted – mounted a cautious recovery in the fourth quarter. Meanwhile, recent economic news-flow has increasingly topped forecasts, implying sturdier conditions than the markets have accounted for.

Euro May Fall as the ECB Stays Cautious Despite Economic Upturn

The extent to which this translates into rosier remarks from Ms Lagarde is likely to be front-of-mind for traders. A cautious tone despite signs of improvement may be interpreted as dovish relative to baseline projections, weighing on the Euro and contributing to an emerging risk-off tilt in global markets.

Starts in:
Live now:
Dec 14
( 03:12 GMT )
Recommended by Ilya Spivak
Cross-Market Weekly Outlook
Register for webinar
Join now
Webinar has ended

Indeed, markets were in a defensive mood in Asia Pacific trade: the anti-risk US Dollar and Japanese Yen rose alongside US Treasury bonds – the perennial haven asset – while regional stocks and bellwether S&P 500 futures well with yields. Newswires flagged worries about the spreading coronavirus as the catalyst.

Euro May Fall as the ECB Stays Cautious Despite Economic Upturn

Chart created with TradingView

Further details on the upcoming ECB policy review will also be of note. Lagarde said after the last policy conclave and in recent testimony to the European Parliament that re-evaluating the central bank’s price stability mandate will be at the heart of this process.

Details are scarce thus far, and the President will probably avoid over-indulging speculative interest by keeping her comments somewhat vague. Nevertheless, the markets will be keen to gauge whether it is likely to carry directional bias implications for monetary policy over the longer term.

EUR Forecast
EUR Forecast
Recommended by Ilya Spivak
Get Your Free EUR Forecast
Get My Guide

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

DISCLOSURES