Morning View: Euro Jawbones And Dollar Surges
Vantage | May 19, 2015 08:10PM ET
Morning View:
EUR/USD came off its highs overnight, dropping sharply as the European Central Bank’s Benoit Coeure said that they could step up their purchases of Eurozone government bonds. The idea here is that the bank can front load its purchases now to avoid the seasonal issues that arise in the following months.
Coeure went on to suggest that the ECB may push interest rates further below zero when setting stimulatory monetary policy. But with Mario Draghi constantly standing by his view that ECB interest rates could not go much beyond the zero level, this all sounds like a bit of good old fashioned jawboning to me.
EUR/USD 4 Hourly:
Click on chart to see a larger view.
With EUR/USD rallying nearly 1000 pips off its lows, this isn’t ideal for the ECB, who would like to see the pair lower in order to stimulate inflation and help export demand growth.
Elsewhere:
Last night also saw the German ZEW survey show that business confidence has fallen to its lowest level since December 2014, while the US saw housing data surprise to the upside, with Housing Starts in April surging to a 7 year high.
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On the Calendar Today:
Quiet one on the data front during Asia, but it all leads us into the FOMC Minutes early tomorrow morning.
Wednesday:
JPY Prelim GDP
AUD Westpac (ASX:WBC) Consumer Sentiment
GBP MPC Official Bank Rate Votes
CAD Wholesale Sales
USD FOMC Meeting Minutes
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Chart of the Day:
The Nikkei hit a 3 week high this morning and looks set to surge through its recent swing high.
NIKKEI Daily:
Click on chart to see a larger view.
Look at that long wicked candle on trend line support and then the way that price rallied hard off the level straight up to its swing high. This is the key level, but it looks pretty strong to me!
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