The Euro’s buoyancy was underlined yesterday by a steady market in which traders put their money to work as the ECB’s decision on whether to extend its asset purchase programme (in which it’s buying bonds) was awaited. If the ECB were to extend its asset purchase programme for another three to six months, it could buy another €500bn, and this could mean another €1.5 trillion in bond purchases by the end of 2018. But, in summary, the Euro is currently flat.
Markets were slightly positive ahead of a long-awaited interest rate announcement from the European Central Bank. The ECB has been stalling on a rate hike, and now the results of its latest meeting are expected to be announced sometime today. The result of the ECB’s meeting will likely determine if the European Central Bank will soon increase interest rates, to put more pressure on the European economy.
- Speech by the President of the ECB and outcome of theexamination
- US unemployment claims are also in the picture
- Markets suffer because China suppresses them
The euro traded slightly below 1.18 today ahead of ECB President Christine Lagarde’s speech and the release of the bank’s strategic review, which was delayed due to the COVID-19 pandemic. The results could have a significant impact on the euro and the currency market in general. U.S. Unemployment Claims will also come under scrutiny today, with analysts expecting the indicator to fall further. Chinese companies trading on Wall Street were also hit hard this week as Beijing imposed restrictions on many large companies.
Mrs Lagarde’s speech will attract attention
ECB President Christine Lagarde will give a speech today that could set the tone for those trading in the euro market and beyond. She is expected to speak about the results of the ECB exam, which she started in 2020, but whose results have been delayed by COVID-19. Since the review was completed yesterday, the data may be released today and traders are watching it closely.
Any change could trigger a move in the EUR/USD pair, despite the fact that the USD is experiencing a strong period, despite the continued decline in Treasury yields. Most of the attention around the survey results will be on possible changes to the 2% inflation target, while rumours of changes to the calculation method could also mean changes to the numbers and the market. References to employment and the environment will also be important for the currency’s response to the speech.
Unemployment benefits expected to decline again
Today, the U.S. Department of Labor will also release weekly data on initial jobless claims. Analysts generally expect the data to show a further drop to 350,000 new job applications. This is in the context of many people trying to get back to work in an increasingly hot labour market where demand exceeds supply in many sectors.
This downward trend continues and today’s figure, if lower than last week’s 364,000, will mark a new low in the history of the pandemic and could impact currency traders. Continuing entitlements are also expected to fall, and there is no evidence to suggest that concerns about the rising delta variant will affect employment.
Chinese worries worry Wall Street
Although the S&P 500 and the NASDAQ closed near new highs yesterday, Wall Street remains concerned that Beijing will take action against many well-known Chinese stocks this week. The move follows Didi’s IPO, which was not well received by Chinese regulators, who advised the company to wait.
This caused a negative reaction: The popular fare app has been removed from Chinese app stores, leading to widespread unrest among Chinese companies doing business in the United States. It looks like this trend will continue on Friday, as the futures market is negative for all major indexes.
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