Inflation Is in Focus Again
Oil prices are rising and Russia banned the export of its petrol. What's happening in the markets?
ECB Key Rate is in Focus
Hello guys! Welcome to Thursday. Let’s look at the markets and the most important news for today.
European economy situation
The European Central Bank will decide today about the key rate. Economists think that the ECB will leave the rate at the same 4.25% level: Deutsche Bank believes that much uncertainty remains over European inflation; Commerzbank expects that interest rates will remain unchanged at subsequent meetings; Nordea Bank assumes that EBC will show its willingness to do more at the following meetings if necessary.
According to Bloomberg sources, there was no clear idea about further actions within the Board of Governors before the meeting. Some officials are concerned that another rate hike will jeopardize the weak European economy. Others believe inflation will not return to the 2% target without further increases.
The strongest economy in Europe is weakening.. The German economy is under pressure. This month, Germany's ZEW current conditions index continued its decline towards the COVID values. The German GDP in the second quarter was released at 0.0%. GDP YoY continues to stay in the negative zone.
The EURUSD is in the bearish channel, but the price may rise soon. What’s going on with the leading Forex currency pair? Stochastic lines are almost intersected in the daily timeframe; it’s a bearish signal. On the other hand, support levels are close. "We expect that the price may return to the upper line of the bearish flag before the breakthrough. If the price breaks the bearish flag now, the nearest support is at 1.06900 and then at 1.06670. The further movement depends on the ECB's decision and the following speech from ECB officials.
US economy and the oil price
The US is importing expensive oil at its highest level since April 2019. It's no surprise that inflation is rising again. Oil prices are in a strong uptrend. XBRUSD touched $92 and bounced back a bit. Such extreme growth may have bad consequences for developed economies. The US is forced to increase its oil production.
The US CPI numbers beat expectations yesterday. CPI YoY was released at 3.7 vs. 3.6% in the forecast. Core CPI slightly decreased to 4.3%. A rebound in consumer price growth will likely ensure that the Federal Reserve will retain the ability to raise interest rates again in November or December after an expected pause this month.
UK GDP and gold prices
The UK GDP for July decreased by 0.5%; industrial production fell by 0.7%. GBPUSD fluctuates next to the 1.24900 level. The long-term trend is bearish – 200MA is heading down. The price may return to 1.23000 (38.2% of Fibo correction)
XAUUSD is falling three days in a row. The price has almost reached the support level of $1900. Williams %R oscillator is moving in its oversold area. What do you think of gold prices, guys? Will the price reverse?
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