The British monthly GDP is announced on Friday at 09:00 MT time.
Markets await ECB's statement
The market sentiment has started improving since yesterday. Riskier assets and stocks surged higher, while the US dollar is headed to the downside. The main event of the day is the ECB’s monetary policy statement. The central bank is expected to leave its monetary policy and rates unchanged. However, there are two absolutely opposite views on the tone of the upcoming meeting. Most analysts believe the bank is going to show more optimism and confidence in the economic recovery, which will push the EUR upwards. While there are some other analysts, who argue that the ECB remains unsatisfied with the appreciated euro, which in turn weighs on exports. Therefore, they believe the bank may take action to push the euro down. So, the further euro’s movement depends on what the ECB will opt for optimism or pessimism.
Let’s look at the EUR/USD chart. It keeps rallying upward. The move above the high of September 4 at 1.1860 will drive the pair further to the key psychological mark of 1.1900. In the opposite scenario, if EUR/USD falls below the low of September 9 at 1.1760, the doors towards 1.1700 will be open. Follow the ECB statement at 14:45 MT time as it will define the further EUR movement! Later on, at 15:30 MT time, the ECB will hold a press conference, where the bank will answer unscripted questions, which will add some additional volatility to the market. Moreover, at the same time US producer price index and unemployment claims will be out.
Speaking about stocks, they have risen too since yesterday. The S&P 500 has just broken through the key psychological mark of 3 400. If it jumps above Tuesday’s high of 3 435, the way to the high of September 4 at 3 475 will be clear.
Let’s move on to gold. The yellow metal has just bounced off the resistance of $1 950. If it manages to cross it, it may surge to the high of September 2 at $1 965. Support levels are at recent lows at $1 925 and $1 910.
Finally, let’s talk about the British pound. It has dramatically plummeted since the beginning of September because of the fears over the no-Brexit deal. However, today the overall risk-on sentiment underpinned even the GBP. Besides, this morning there was the UK upbeat report on the housing market also added tailwinds. If GBP/USD jumps above the recent high of 1.3050, it will clear the way towards the next resistance of 1.3120 at the 200-period moving average.
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
The US unemployment claims are out on Thursday at 15:30 MT time.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.