The ECB raised rates by 75 basis points which was semi expected. In doing so, the ECB raise projections for inflation (see 5.5% in 2023 now vs 3.5%),
The ECB raised rates by 75 basis points which was semi expected. In doing so, the ECB raise projections for inflation (see 5.5% in 2023 now vs 3.5%), lowered growth for 2023 (seee 0.9% vs 2.1%), and 2024 (see 1.9% vs 2.1%) while raising growth for 2022. The ECB’s Lagarde said that 75 bps was not the norm, but policy was dependent on data and on a meeting by meeting basis. She also said that
Risks to inflation tilted to the upside, risks to growth to the downside
initial size of inflation expectations above target warrants monitoring
The EURUSD
EUR/USD
The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars. Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others.
The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars. Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others. Read this Term moved marginally higher peaking at a swing area between 1.0022 and 1.00328, but rotated back to the downside soon thereafter. Later when the traditional ECB sources comments were released that said 75 basis points should be considered at the next meeting, the EURUSD move to its lows of the day at 0.99299 (fell from around the 1.000 level). There was large expirations of options at the 1.0000 level, which may have contributed to the sharp decline as well.
However the pair ended up rebounding, and once the price moved above the 200 hour moving average at 0.99721, sellers turned the buyers later in the afternoon with the price moving back toward the parity level. The day is closing near 0.9998, which is down modestly from the 1.0006 close level from yesterday level.
Looking at the strongest to weakest of the major currencies
Currencies
Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the population that uses that currency.For example, the United States dollar, (symbol $, code USD), or the British pound sterling, (symbol £, code GBP), also known as fiat money, since they are not linked to any specific asset, such as gold or silver. Such metals were traditionally used as the main method of payment, since they held real and actual value. Even after the introduction of paper notes, many countries maintained a gold standard for much of the 20th Century, meaning a unit of money could be exchanged for a fixed amount of gold. How to Trade Currencies?The modern world, with the invention of electronic networks, computers and the internet, has allowed the transfer of money to occur almost instantaneously. It has also spawned a new era in currencies, including digital money, such as Bitcoin and Litecoin. Not backed by any government, but based on a complex set of mathematical software algorithms, the ubiquity of the internet has generated interest and uptake of digital currencies, whilst providing relative anonymity. Digital currencies can now also be traded online, via exchanges and brokers, similar to trading foreign currencies, known as the foreign exchange market. Forex is the world’s largest market, with over $5 trillion turnover per day, where fiat, floating currencies are bought and sold against other currencies, such as the euro vs the dollar (EUR/USD), and the British pound vs the Japanese yen (GBP/JPY).
Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the population that uses that currency.For example, the United States dollar, (symbol $, code USD), or the British pound sterling, (symbol £, code GBP), also known as fiat money, since they are not linked to any specific asset, such as gold or silver. Such metals were traditionally used as the main method of payment, since they held real and actual value. Even after the introduction of paper notes, many countries maintained a gold standard for much of the 20th Century, meaning a unit of money could be exchanged for a fixed amount of gold. How to Trade Currencies?The modern world, with the invention of electronic networks, computers and the internet, has allowed the transfer of money to occur almost instantaneously. It has also spawned a new era in currencies, including digital money, such as Bitcoin and Litecoin. Not backed by any government, but based on a complex set of mathematical software algorithms, the ubiquity of the internet has generated interest and uptake of digital currencies, whilst providing relative anonymity. Digital currencies can now also be traded online, via exchanges and brokers, similar to trading foreign currencies, known as the foreign exchange market. Forex is the world’s largest market, with over $5 trillion turnover per day, where fiat, floating currencies are bought and sold against other currencies, such as the euro vs the dollar (EUR/USD), and the British pound vs the Japanese yen (GBP/JPY). Read this Term, the CHF is ending the day as the strongest of the major currencies while the NZD and AUD battle it out for the weakest.
The strongest to weakest of the major currencies
S&P’s Jordan spoke about maintaining price stability over the medium-term. He also said that exchange rates play a role in Swiss inflation and that went big central banks act, it helps us. The EURCHF is trading near its lowest levels since early 2015. The price is closing today below the January 2015 low at 0.97065. The price is currently at 0.9700. The USDCHF is is not near its lows for the year which were reached in early January, but it has moved back lower over the last 2 trading days, and tests its 100 day moving average near 0.9692. It is also well off its highs for the year near 1.0063.
Fed’s Powell also spoke in a lengthy 45 minute interview with Cato Institute. He reiterated a lot of his comments from the Jackson Hole 8 minute speech, saying that the Fed needs to keep going until it gets the job done on inflation. In a shift from central bank rhetoric he also said that we hope to usher in a period of below trend growth and with it get labor markets back into balance. On inflation expectations, a key concern for Fed officials, the Fed chair said that today they are well anchored over the long-term, but the clock is ticking and the Fed has more concerns that the public will incorporate higher inflation expectations in the short-term.
Unlike in the Jackson Hole speech, stocks held in despite the Fed chairs comments. The major indices all close higher for the 2nd consecutive day with modest gains of around 0.6%.
In other markets today:
spot gold fell $9 or -0.54% at $1708.63
spot silver rose $0.10 or 0.53% $18.53
crude oil rebounded modestly to $82.61 that’s up around $0.60 on the day. The weekly crude oil inventories showed a surprise build of 8.844 million vs. expectations of a small draw of -0.25 million. Gasoline stocks increase by 0.333M vs. expectations of a drawdown of -1.667M
the price bitcoin is trading modestly higher at $19,376
In the US debt market, yields were higher across the board:
2 year 3.51%, +7.3 basis points
5 year 3.424%, +6.4 basis points
10 year 3.319%, +5.2 basis points
30 year 3.478%, +6.4 basis points
Tomorrow, Canada will release their jobs report. Next Tuesday the US CPI report will be released.
In said news, Queen Elizabeth died at the age of 96 years old. Prince Charles will assume the role of monarch becoming King Charles III. Rest in peace.
