Draghi: Inflation Will Hold above 2% Throughout 2012

<p>Draghi: Inflation Will Hold above 2% Throughout 2012. The ECB Governing Council announced yesterday that the main interest rate will remain unchanged in April at […]</p>

Draghi: Inflation Will Hold above 2% Throughout 2012. The ECB Governing Council announced yesterday that the main interest rate will remain unchanged in April at the record low 1.0%. During a press conference following the announcement president Mario Draghi repeated last month’s forecast that inflation will stay above 2% this year and it will decrease below this level in 2013, while the pace of monetary expansion remains subdued.
Range: 1.3137 – 1.3164
Support: 1.3135
Resistance: 1.3160

Euro-dollar closed in NY at 1.3140 after recovering from session lows of 1.31072. The rate eased back to mark early lows in Asia at 1.3136 before resuming its recovery. Offers placed to 1.3150 again provided resistance, but fresh demand emerged to trigger weak stops above this level with rate eventually able to claw its way up to overnight highs of 1.3158. The rate settled between 1.3145-1.3155 ahead of the European open but underlying tone remains buoyant. Offers now seen into 1.3160, a break to open a move to 1.3180, followed by 1.3200. There was a strong option defence ahead of a reported barrier at 1.3100, bids seen placed between 1.3135-1.3125, a break to expose that 1.3100 area.

Range: 1.5894 – 1.5908
Support: 1.5880
Resistance: 1.5910

Cable closed in NY around 1.5890, after the rate had bounced back from traded lows at 1.5833 to a session recovery high of 1.5895. The rate resumed its recovery tone into Asian trading, the rate pushing to a high of 1.5909 before settling between 1.5895-1.5905 ahead of the European open. Moves through Asia were basically led by euro-dollar as euro-sterling consolidated Wednesday’s losses, the cross extending recent lows to 0.8262, with trade overnight contained within 0.8265-0.8273. Position adjustments expected ahead of the long Easter weekend break. Offers at 1.5910-1.5920 then 1.5950, followed by 1.5975-1.5980. Bids in place at 1.5880-1.5870, 1.5850 and 1.5835-1.5830.
Range: 1,620.26 – 1,626.97
Support: 1,612.40
Resistance: 1,636.25

Gold is trading around 1,623.50 in Asia in quiet trade ahead of the long weekend. The metal suffered another sharp fall yesterday as risk off sentiment grew in Asia and Europe on concerns over Spain, and was compounded by a poor Spanish bond auction and comments from ECB’s Draghi. Further comments from the US that QE3 now appears to be off the menu has taken the shine of gold this week and the metal dipped another $35 yesterday to add to the $42 it lost on Tuesday following the release of the FOMC minutes. Gold hit lows of 1,612.40 in NY yesterday which now forms the first level of support. A break here points down to the 1,605-1,600 levels which should hold stronger demand. Resistance is seen up at 1,636.25 and 1,648.10.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.