FX Brief: Calls grow for more ECB stimulus

A summary of news and snapshot of moves ahead of the US session.

  • As we head towards the latter end of the European session, the GBP was the strongest and AUD and EUR among the weakest.
  • GBP continues to shine on short-covering after the expected announcement of Boris Johnson as the new Tory leader and PM yesterday. EUR undermined by Eurozone’s latest manufacturing PMIs, which were recessionary. They have come a day before the ECB makes its interest rate decision. Calls have grown louder for the ECB to introduce more stimulus, or at least promise to do so. The probability of a 10 basis point cut in the deposit rate tomorrow rising to just under 50% from around 40% before.
  • Greek debt crisis? What crisis? The 10Y GGB yield has plunged below 2% for first time ever.
  • Thanks to falling bond yields across the developed economies, sentiment towards stocks and precious metals continue to remain favourable.
    • Gold is up after staging a corrective pullback over the past few days; silver has hit a new 2019 high!
    • Stocks are not as eye-catching as the day before, but sentiment still positive after Mnuchin said he expects his trip on Monday to China trip will be followed by Washington meetings. Company earnings coming in thick and fast: Facebook and tesla among companies reporting after the bell. It may be worth keeping an eye on tech names after the US government announced last night that it was investigating Google, Amazon, Apple and Facebook for anticompetitive practices.
  • No major data expected today

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.