September ECB Meeting Up Next
The main data focus today is of course the September ECB meeting. While the bank is not expected to adjust its policy rates, the big question is whether the bank will announce an adjustment to its PEPP buying over the remainder of the year. Expectations are widely split ahead of the meeting with some players judging the risks around Delta as likely to see the ECB deliver a dovish message, refraining any tapering signal. Others view the recent upward trend in data as strong enough to see the ECB scaling back from purchases.
Given the cautious tone we have heard from the RBA and BOC this week, it seems likely that even if the ECB does announce tapering or offer a tapering signal, it is likely to do so within a message of caution which will likely dampen any upside moves. The key focus therefore will likely be on the inflation and growth forecasts issued. If inflation forecasts are revised higher, this is likely to see EUR lift in the near term, regardless of the language (or lack of it) around tapering. On the downside, if inflation forecasts aren’t revised higher and no tapering signal is given, this could see EUR unwind sharply.
Where to Trade the ECB Meeting?
EURJPY
The recent bullish breakout in EURJPY saw price stalling into a test of the 130.69 level. With indicators still bullish, however, and while price holds above the 129.59 level, there is room for the breakout to continue if EUR trades higher in response to the ECB today. A break above the 130.69 level will target a run up to 132.02 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.