ECB Meeting |
Just like that a month went by. It seems that only yesterday the European Central Bank has raised its interest rates for the first time in, well, ages, but we are already on the eve on the next one. The recent rally in the Euro (against the USD) has been widely attributed to increasing risks of inflation, and, eventually, appropriate response by the ECB. Tomorrow’s meeting is not expected to bring any changes in rates, at least that is the consensus, but the comments will be under tremendous scrutiny. There must be implied “promise” of more rates hikes in the near future, otherwise the Euro might sell off. The common currency has become very sensitive to remarks, and Thursday should be no different. On the same token, the Pound as well, since the Bank of England meets tomorrow, too.
Another issue that the Euro has not resolved is the fate of Spanish debt. All has been quiet on that subject for some time now, but there are no reasons to believe that problem has simply disappeared. If anything, it has been swept under a rug, only to resurface again, probably in not too distant future. For what we know, it could once again become a focal point, as soon as the more immediate matter of interest rates is out of the way for another month. After all, markets always have a bone to chew on (or the analysts), and solvency of Spain is as good, and serious. as any. I am sure we will hear about it again in short order.
In my last post I wrote about NZD-CAD, possibly buying it. Situation has changed since and the picture looks quite different. My buy order is still valid, but I am also adding a sell order at 0.7520. This pair has created a congestion, which could prove to be a top. In my mind a straddle here is a good potential play. Both orders target about 100 pips and now it is up to the market to decide which way to move.
Few days ago I also mentioned a potential trade in the AUD-JPY. That buy order is cancelled now. The Australian Dollar is going through a phase of weakness, after reaching 1.1000 in relation to the USD and I need more time to decide what to do next. Also, with two interest rates decisions due tomorrow, it is a good time to focus on short term trades, around the start of the London session.
Mike K.
About the author: Mike Kulej
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