The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Morning brief for June 8
2019-11-11 • Updated
Currency ranges in Tokyo morning were subdued as traders take a time out ahead of an onslaught of major events today including a general snap election in the UK, an ECB monetary policy meeting, and testimony by James Comey, the former FBI director.
The US dollar index remains at its eight-months low as investors lost faith in Trump’s ability to push through his stimulus plans. There is an impeachment heaving in sight as James Comey in his written statement deposed to a fact that Donald Trump did ask him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia’s interference in the US presidential elections. His oral testimony may strengthen an impeachment case build on obstruction of justice, but first, prosecutors should prove that incumbent US President Donald Trump acted with corrupt intent.
EUR/USD is trading range bound near 1.2560 before the ECB meeting and Mario Draghi’s press conference scheduled for 2:45 and 3:30 pm (MT time) respectively. ECB’s policymakers are up to announce a “no change” to their monetary policy settings and probably to upgrade their economic assessment and policy guidance with regards to Eurozone in lights of strengthening of its economic fundamentals. The inflation forecast would be cut to 1,5% for this year from 1.7% as the lower prices one energy source might be taken into account. A “no change” decision without any hints of bank’s intention to remove the reference to lower rates, or change its extremely dovish tone to an at least hawkish one will likely weigh on the EUR.
Another threat event of today is a snap election in the UK. GBP holds firm above 1.2950 due to incoming polls indicating that Tories are on course to win the election with a decent majority. Yet the traders remain concerned ahead of the election outcome as Conservative party’ s lead over its major rival Labour party has been narrowing throughout the campaign. Theresa May called the snap election in April seeking to strengthen her position in the talks with EU officials over Brexit, but the internal Tory backlash over the failures of her campaign as well as horrific terrorist attacks made her position more vulnerable, more perilous than before. GBP/USD is trading at 1.2960. There is a slight upside bias. The pound may extend its gains towards 1.3000/1.3050 resistance levels. If Tories fail to gain a solid ground in the election, we will see the pair tumbling to the much lower levels – 1.2880, 1.2770. If they manage to win a solid majority, we will easily see a surge in the GBP.
The yen has strengthened against the USD in Tokyo morning despite disappointing final GDP that came from Japan. Investors raised their demand for this safe-haven currency ahead of the numerous risky events and on the increased Qatari activity and North Korea’s missile tests. USD/JPY is trading at 109.45. There is a room for the further weakness of the greenback. The quotes may move towards the supports at 109, 108.70.
US oil exports reached a record last week at five million barrels a day, according to Energy Information Administration data…
The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates?
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.