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EUR/USD: ECB decision on rates _02/06/2016

PCM Brokers

Technical analysis and trading recommendations - https://fxpcm.com/en/fx/eurusd-ecb-decision-rates-02062016

Yesterday, US data released stronger than expected, which boosted investor demand for riskier assets. Manufacturing Purchasing Managers Index (PMI) ISM rose to 51.3, higher than in April, as well as better than expected (50.4). Readings above 50 indicate growth, and strengthen the dollar. ISM index shows growth for the third month in a row.

Also published yesterday "Beige Book" (the economic conditions in the regions of the central bank's report) pointed out that "in most regions experiencing a rise in labor markets." Wages and employment growth are called moderate.

These data support the view that the Fed may raise interest rates in the coming months, in June or July. Earlier, the head of the Federal Reserve Janet Yellen also stated that "the increase in rates is likely to be appropriate in the next few months," depending on the incoming economic data.

Incoming data give strength to the US dollar. However, today it is necessary to be careful in making trading decisions.

The central event of the day in the financial markets is the ECB's decision on interest rates in the Eurozone (11:45 GMT). According to the majority of market participants, while the ECB will not change policy and will take a wait and see position. It is expected that the European Central Bank will leave the amount of asset purchases at 1.8 trillion euros ($ 2 trillion US dollars) and will keep its key interest rate unchanged at 0%, the deposit rate negative at -0.4%. At a press conference following the meeting (12:30 GMT + 2), ECB President Mario Draghi will probably be to stick to the soft tone of statements and emphasize that the bank will take additional measures if necessary.

This M.Dragi will continue to uphold the policy of extra soft and call your bank to have patience before these policies bring tangible results.

M.Dragi’s words can sharply send EUR / USD pair, both up and down.

In general, if M.Dragi will not make sharp statements, the pair EUR / USD will continue to decline, as the dollar strengthened in the currency market in anticipation of the Fed meeting on 15 June.

Source: https://fxpcm.com/en/fx/eurusd-ecb-decision-rates-02062016
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