This week's ECB meeting can be the most important event of the year for euro as low inflation threats can be an obstacle to EU recovery. The President of the European Central Bank Mario Draghi has already signaled the fact that ECB is ready to take action at this week's meeting including both conventional and unconventional measures.

Market expectation for ECB meeting:

  1. Refi rate to be cut by 15bps to 0.1%;
  2. Deposit rate from zero to -0.15%

Cutting the interest rate on deposits below its current level of zero to -0.1 percent, means that ECB will be charging banks to park their cash at the ECB. So this in theory will force Bank to lend more rather than to have to pay to park their money at the ECB so this will grow the money supply and thus weaken the euro.

The only question that remains unanswered is whether or not ECB will engage in an aggressive quantitative easing campaign which at this point is unlikely.

US week ahead looks very interesting as well with heavy economic data scheduled to be released like Nonfarm Payrolls, ISM, Factory Orders, Trade Balance.

Market is expecting another strong reading of Nonfarm Payrolls after last week reading of 288k which is the biggest figure in about 4 years. Although the market is expecting only 220k for May's Nonfarm Payrolls which is obviously below last reading of 288k, it's still a good number. Most likely that surge in job creation from last reading was due to high demand after the harsh winter.

Other major risk events for the week ahead are the RBA's rate decision,Australia's GDP and Retail Sales.

All this major risk events will increase the volatility so be careful and trade safe.

Best Regards,
Daytrader21
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