ECB Rate Hike Decision Awaits

The Forex market will be highly focused on today’s European Central Bank policy release, which might result in a rate hike from 4.25% to 4.50% in the main refinancing rate.

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  1. The European Central Bank will be holding a policy meeting today at which it is expected to hold rates, despite continuing fears over unacceptably hot inflationary pressures. Some analysts expect that there will be a 0.25% rate hike by the Bank today.
  2. Yesterday’s release of US CPI (inflation) data saw monthly CPI come in as expected, while Core CPI was just slightly above expectations, putting annualized inflation slightly higher than expected at 3.7% instead of 3.6%. The release, apart from triggering short-term volatility, seems to have had little impact on the market, although stock markets are mostly a bit higher.
  3. The Forex market is seeing a softer US Dollar. Since the Tokyo open, the US Dollar has been the weakest major currency, while the Swiss Franc has been the strongest. However, the US Dollar remains within a valid long-term bullish trend, keeping the USD/JPY currency pair in focus on the long side for trend traders.
  4. Crude Oil remains strong, WTI again reaching a new 10-month high price yesterday above $89. OPEC a, making it very attractive to trend traders on the long side.
  5. Cocoa futures rose strongly yesterday to reach another new multi-year high price.
  6. There will be releases today of crucial US economic data: PPI, retail sales, and unemployment claims.
  7. Bitcoin is threatening to break down to new 2-month lows as the crypto sector remains weak, with the price unable to get established above the key resistance level at $26,329.
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