ECB Day Ahead

“Take risks. Failure is a stepping stone to success.” - Arianna Huffington

 

 

HEADLINES

 

 

• Dollar eases, ECB looms
• ECB set to tweak guidance to reflect its new 2% inflation target
• RORO Keeps Pound Sterling Under Pressure Against Euro, But ECB to Provide a Safety Brake
• Oil up 5% Despite Crude Build as Bulls Seize Back Control of Market
• Wall Street ends higher, powered by strong earnings, economic cheer
• Bitcoin extends gains, climbing above $32,000 as cryptocurrencies rebound from sell-off
• Gold to ‘rebound sharply’ towards $2000 – Goldman Sachs

 

 

FOREX

 

 

Dollar eases, ECB looms

 

The market mood improved, and the greenback shed some ground, although no critical level was broken. The EUR/USD pair hovers around the 1.1800 level, as caution prevails ahead of the European Central Bank monetary policy decision. The ECB is widely anticipated to maintain its monetary policy unchanged, although the general perception is that policymakers will maintain a dovish stance.

 

ECB set to tweak guidance to reflect its new 2% inflation target

 

The European Central Bank’s new inflation target and its possible effects on monetary policy will be the key topic of this week’s meeting in Frankfurt. Hopes are high that the euro zone’s central bank will come up with a dovish surprise as President Christine Lagarde keeps stressing the need for a forceful policy response to avoid a de-anchoring of inflation expectations.

 

RORO Keeps Pound Sterling Under Pressure Against Euro, But ECB to Provide a Safety Brake

 

The British Pound has now fallen for five days in succession against the Euro with foreign exchange markets selling the UK currency in conjunction with a dip in global market sentiment, although Thursday's European Central Bank meeting might offer some near-term stability. Risk-on / risk-off patterns (RORO) have come to dominate markets over recent days with risk-on assets such as stocks and commodities falling as investors take fright over the global jump in Delta cases.

 

 

COMMODITIES

 

 

Oil up 5% Despite Crude Build as Bulls Seize Back Control of Market

 

Oil prices jumped 5% on Wednesday, rising even after a surprise build in crude stockpiles that snapped eight weeks of declines, as bulls seized back control of the market after a plunge earlier in the week.

Crude inventories showed a build of 2.108 million barrels during the week ended July 16, the Energy Information Administration said, wrong-footing analysts who had expected a draw of 4.466 million barrels.

 

 

STOCKS

 

 

Wall Street ends higher, powered by strong earnings, economic cheer

 

Wall Street stocks posted their second straight daily gain on Wednesday, with robust corporate earnings and renewed optimism about the U.S. economic recovery fuelling a risk-on rally.

All three major U.S. stock indexes added to their previous session's advance, placing all three within 1% of their all-time closing highs.

 

 

CRYPTO

 

 

Bitcoin extends gains, climbing above $32,000 as cryptocurrencies rebound from sell-off

 

Bitcoin and other cryptocurrencies recovered Wednesday after a brief sell-off, with the world’s biggest digital coin climbing back above $30,000.

The price of bitcoin traded as high as $32,765 Wednesday, according to Coin Metrics, and last traded at 31,641, about 6% up on the day. Smaller cryptocurrencies ether and XRP also rebounded about 6% each.

 

 

ANALYSIS

 

 

Gold to ‘rebound sharply’ towards $2000 – Goldman Sachs

 

“Commodities to rebound sharply unless there are widespread lockdowns due to the spreading delta mutant coronavirus… Do not expect widespread lockdowns… Even if they were it delays the rapid bounce back by six to eight weeks, citing past experience.”

“Forecast gold at US$2,000/oz in 3, 6 and 12-month horizons.”

 

 

CHART

 

 

Euro – British pound – 4-hour Candlesticks

Source: GKFX Prime Metatrader 4

EUR/GBP is pulling back from a big snap higher that took the price above a falling trendline. A potential re-test of the broken trendline combined a demand area and the 50% and 61.8% retracement levels could offer support. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

SOURCE

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/gold-price-forecast-xau-usd-to-rebound-sharply-towards-2000-goldman-sachs-202107210411
https://www.fxstreet.com/news/forex-today-dollar-eases-ecb-looms-202107211953
https://www.investing.com/news/stock-market-news/wall-street-ends-higher-powered-by-strong-earnings-economic-cheer-2563798
https://www.investing.com/news/commodities-news/us--crude-oil-stockpiles-up-unexpectedly-first-time-in-9-weeks-2564121
https://www.cnbc.com/2021/07/21/bitcoin-btc-price-climbs-back-above-30000-usd.html
https://www.cnbc.com/2021/07/21/ecb-set-to-tweak-guidance-to-reflect-its-new-2percent-inflation-target.html