As
can be seen from the economic calendar extract above, there are a number of
events taking place today that have the potential to create high impact on a
number of Foreign Exchange pairs.
The
announcement for Australian Balance of Trade figures is already in at the time
of writing, and they are better than expected. The value of exports in relation
to imports, while still a deficit, is not as large a deficit as had been
expected and represents an improvement on the previous month. The Aussie
dollar, which had already gained on the strength of GDP figures that were
announced yesterday, hardly reacted to the Trade Balance outcome.
There
will be interest rate decisions and monetary policy statements from both the
Bank of England and the European Central Bank (ECB), while in the USA the ADP
jobs report might give an indication of what to expect in the critical Non-Farm
Payrolls report on Friday.
As
far as the Bank of England and the British pound are concerned, anything that
might be announced today will almost certainly be overshadowed by the fears
that have recently surfaced that Scotland will vote to become independent of
the rest of GB. The referendum on this is two weeks from today.
Will Mario Draghi step up?
So
the biggy today could be the ECB statement and, possibly even more important,
the Press Conference afterwards.
Mario
Draghi has already let it be known that his officials are getting ready to
implement a program of asset backed security purchases, which would make money
more freely available to the banks and therefore to businesses. This would tend
to weaken the Euro although, we believe, it is already priced in as a result of
his telegraphing of it at the recent Jackson Hole symposium.
But
there is another consideration too. The ECB has not yet managed to complete the
much lauded stress tests on Euro zone banks, which will be a prelude to banking
union. This will be a combination of new capitalization rules, direct supervision
of the most important banks and the last resort of the Single Resolution Board,
designed to deal with any bank that fails in spite of the other measures. We
feel that any sort of formal announcement of economic easing would be expected
to come about only after all these have been implemented in full.
In
the meantime Senor Draghi is rather good at talking down the Euro.
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