Kantox currency update: markets, steady awaiting the Brexit summit
The major currencies have remained moving within previous ranges over the last sessions, with market sentiment soured by fresh trade tensions about the European Union and the US ahead of a key European Council summit to decide a new extension to the Brexit deadline.
EUR/USD recovery stalls below 1.1285. Euro rally from 1.1180 lows last week was halted on Tuesday at 1.1285 and the pair eased back to 1.1260 area during the day, as the investors prepare for the outcome of the ECB monetary policy meeting, due later today. As at the London market opening times, the EUR/USD is trading at 1.1265.
GBP/USD capped below 1.3100. The pound advanced to intra-day highs at 1.3125, but the pair failed again to consolidate above 1.3100 and retreated to 1.3050 area awaiting the EU Brexit summit. As at London market opening times, the GBP/USD is trading at 1.3075.
USD/JPY pulls back to 111.00 area. The dollar depreciated against the yen in risk-off session on Tuesday, to extend its reversal from 111.85 highs last week to reach intra-day lows at 111.00. As at London market opening times, the USD/JPY is trading at 111.15.
In the Calendar Today
Today we will have a busy calendar, starting with the UK industrial and manufacturing production figures. Both indexes are expected to have deteriorated significantly from the previous month, which might increase concerns about the strength of UK economy and push the pound lower.
Today, in the EU, the most interesting event will be the ECB interest rate decision, due on Wednesday. The bank is expected to leave its benchmark rate at the current 0%, thus the focus will be on Draghi’s press release. With the Eurozone showing signs of economic slowdown, Draghi might suggest postponing rate hikes further into 2020, which would increase negative pressure on the euro.
In the US, the Department of Labour Statistics will release the Consumer Prices Index. Inflation is seen ticking up, with the core CPI steady above the 2.0% Fed target. This might add pressure for the central Bank to accelerate consider another interest rate hike, which might increase demand on the euro.
Somewhat later, the European Council summit on Brexit will be observed with interest by the investors as it might deliver a delay of Article 50 to avoid a hard Brexit. Such a scenario would be positive for the pound, on the contrary, the failure to reach a deal might add bearish pressure to the pound.
Finally, the Federal Reserve will release the minutes of the last monetary policy meeting. The Fed confirmed a dovish turn on their last monetary policy meeting and triggered a bearish reaction on the dollar.
08:30 GMT UK: Manufacturing Production (MoM) (Feb)
Prev: 0.8% Cons: 0.2%
08:30 GMT UK: Industrial Production (MoM) (Feb)
Prev: 0.6% Cons: 0.1%
11:45 GMT ECB: interest rate decision
Prev: 0% Cons: 0%
12:30 GMT ECB: Monetary policy statement
12:30 GMT US: Consumer Prices Index (YoY) (Mar)
Prev: 1.5% Cons: 1.8%
16:00 GMT European Council summit on Brexit
18:00 GMT FOMC minutes