The euro/British pound (EUR/GBP) currency pair could be on the verge of a breakdown after the European Central Bank’s policy decision on Thursday. While the central bank’s plan to end quantitative easing programme at the end of the year was a hawkish development, investors had already priced in that decision.
This week has all been about major central bank meetings and as we had anticipated last week, it was indeed the European Central Bank that caused the most market impact with its decision. The euro/U.S. dollar (EUR/USD) currency pair almost fell 300 pips from its high on Thursday and European stocks rallied sharply after the ECB indicated that interest rates won’t rise until at least mid-2019, even if asset purchases were going to finish at the end of December.
As Russia smoked Saudi Arabia in the World Cup, crude oil ministers from those two countries signaled that indeed OPEC and Non-OPEC countries will be raising oil output. Saudi Arabia’s oil minister said it is “inevitable” that OPEC and Russian production will rise by what he says is a "reasonable and moderate" amount. T
As my colleague Fawad Razaqzada noted earlier today, the euro spiked briefly after this morning’s ECB meeting before reversing violently back to the downside in a mirror of yesterday’s price action in the US dollar.
The euro/U.S. dollar (EUR/USD) currency pair spiked higher before coming under intense selling pressure in the immediate aftermath of the European Central Bank meeting as speculators judged the policy statement to be overall more bearish than bullish.
The recent growth acceleration in the EU could distract attention from problems of the common bloc. Fortunately, you can always count on Italy. Whenever you start thinking that only bright future is ahead of the union, the descendants of the proud Romans remind about themselves.
Although the European Central Bank is widely expected to keep monetary policy unchanged in June, investors are likely to be more concerned with the latest economic growth and inflation forecasts. Expectations remain somewhat elevated over the ECB potentially signaling an end to (quantitive easing) QE at the meeting. While hawkish comments from ECB officials and accelerating inflation have fuelled speculation over QE coming to an end, this could be a classic case where markets may be setting themselves up for disappointment.