MARKET BRIEFING – LONDON OPEN 22.10.2015
The European Central Bank roadshow hits Valetta, Malta today. This latest ECB meeting and press conference will take place against a backdrop of increasing speculation that the President of the ECB, Mr. Mario will announce further stimulus measures.
Sluggish German manufacturing and export data has caused concern, however, this has been discounted by the German Economy Ministry that views these disappointing readings as being due to seasonal factors.
The main issue for the ECB, of course, is the outlook for Euro-Zone inflation. The recent dip of Euro-Area inflation to -0.1% has coincided with what seems to be an overly optimistic outlook expectation that inflation will reach 1.7% by Q4 in 2017.
The other main concern is what Janet Yellen and her colleagues on the committee of the Federal Reserve decide to do with respect to interest rate increases.
It would seem fairly obvious that the ECB would want to wait for the FOMC to either move first or at least offer further clarity on its future monetary policy. Only then will the ECB take further measures.
The fear being that an ECB decision to increase stimulus will not have any significant impact if this takes place prior to the Federal Reserve moving on rates.
The consensus for today’s press conference is that the ECB will not announce any changes to current policy. However, it would be likely that the downside risks will be emphasized in what should be a dovish press conference. This would be line with comments made by other members of the ECB board.
The ECB does have additional tools that it can implement and Mario Draghi has informed the markets that the Central Bank will do whatever it takes to bring back growth and inflation to the Euro-Area.
These measures could include extending the duration of the current programme or expanding the scope of asset purchases.
Although such move would be in line with the ECB mandate the German Bundesbank may offer some resistance to such a move as it would question why would more QE work?
If, as it is expected the ECB announces that no further measure will be taken today, it is clear that this is not the end of this story.
The ECB will leave the door ajar for further stimulus. It is to be expected that Mario Draghi and fellow board members will do their best to guide the market and talk down the value of the Euro.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.1415
Target 2: 1.1260
Projected range in ATR’s: 0.0080
Daily control level: 1.1300
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5515
Target 2: 1.5315
Projected range in ATR’s: 0.0101
Daily control level: 1.5410
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 120.50
Target 2: 119.30
Projected range in ATR’s: 0.60
Daily control level: 119.40
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.9665
Target 2: 0.9520
Projected range in ATR’s: 0.0076
Daily control level: 0.9525
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3245
Target 2: 1.3025
Projected range in ATR’s: 0.0111
Daily control level: 1.2935
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7295
Target 2: 0.7120
Projected range in ATR’s: 0.0087
Daily control level: 0.7240
GOLD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1182.75
Target 2: 1152.00
Projected range in ATR’s: 14.49
Daily control level: 1180.75
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 47.50
Target 2: 44.00
Projected range in ATR’s: 1.72
Daily control level: 47.00
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