Markets trade within range ahead of ECB and BoE announcements today

<p>AUD was the only mover in Asia ahead of the BoE and ECB meetings today as the lifestyle currency continues higher following the easing bias […]</p>

AUD was the only mover in Asia ahead of the BoE and ECB meetings today as the lifestyle currency continues higher following the easing bias removal from the RBA on Tuesday.

The latest catalyst came from the domestic economy that saw retail sales in line for December as business confidence in Q4 rose three points.

The current account switched from a deficit of AUD 200 million to a surplus of AUD 468 million, allowing AUD to break the 55-day moving average at 0.8940 with ease.

The market will be focusing on the BoE and ECB meetings today – particularly the latter.

The MPC are likely to remain on hold today as any change in forward guidance is likely to be announced at next week’s quarterly inflation report.

The ECB has the market far more divided, with the majority expecting no change today. Most are pointing to the March meeting for some sort of easing. This follows the EU PMI data that ECB President Draghi put as ‘modest growth’ so maybe there is less urgency for action to cut rates today, especially since there was very slight improvement in the unemployment data.

On the other hand, however, January’s inflation report came in weaker at 0.7%, which is where inflation was when the ECB last cut rates in November. Any bolder action in the form of a negative deposit rate announcement would be the most powerful statement of intent from the ECB.

The US data calendar takes the form of the US trade deficit and the weekly initial claims data.

 

EUR/USD

Supports 1.3475-1.3460-1.3400 | Resistance 1.3550-1.3575-1.3635

 


USD/JPY

Supports 100.60-99.80-98.50 | Resistance 101.40-101.75-102.90

 



GBP/USD

Supports 1.6245-1.6210-1.6180 | Resistance 1.6350-1.6410-1.6460

 

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