What drives the market on August 12?
The US dollar edged higher, while gold dipped down. Let’s discuss main news and market movements in detail.
EUR is fragile: ECB statement on April 30
The European Central Bank will unveil the refinancing rate and make the monetary policy statement on April 30 at 14:45 MT.
Instruments to trade: EUR/USD, EUR/GBP, EUR/AUD, EUR/CAD, EUR/CNH, EUR/CHF, EUR/NZD, EUR/JPY
Europe has been enormously damaged by the COVID-19. The IMF anticipates the GDP of the euro area to decline by 7.5% this year. There’s little the ECB can do to prevent the fall but it can mitigate the coronavirus impact.
The ECB has already taken some actions. Last month it effectively allowed Greek lenders to borrow from the central bank. Then, it has started accepting junk debts that shield sovereigns such as Italy from a downgrade. However, the ECB’s coronavirus program might expire by October if the central bank continues buying sovereign bonds at the same rate.
If there is no result, the bank would even have to try helicopter money. Just imagine, money that is falling out of a helicopter to the people below. However, it would not be the same in reality. According to Pictet Wealth Management, the ECB could offer money to banks at -1% under a condition that they grant 0% loans to their customers. Some analysts think that it could be a good option amid the present crisis.
Let’s see what the ECB will propose on April 30. Also the ECB press conference will be that day at 15:30 MT that often creates the heavy market volatility. Stay tune and remember:
If the ECB’s monetary policy statement is hawkish than expected, it will push EUR upward.
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The market sentiment improved after the USA reported some decreasing in coronavirus hospitalizations. Gold dropped below $2 000 and the US dollar dipped down, while stocks surged. Let’s have a closer look.
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