Forex Today: Markets Expecting ECB Hike of 0.25%

 The European Central Bank is expected to announce a 0.25% rate hike at its policy meeting today.

  1. The European Central Bank will be conducting a policy meeting today. It is widely expected to hike its Main Refinancing Rate by 0.25% to 3.75%, and the Euro is strong in anticipation.
  2. The US Federal Reserve met yesterday and agreed unanimously to hike rates by 0.25% to 5.25%, a level which has not been seen in many years. The Fed also removed language from its statement which had implied further rate hikes, boosting hopes in the market that this will be the last hike in the current tightening cycle, although the Fed are taking a rhetorically more hawkish position and not fully ruling out another rate hike next month. Powell also stated that he does not expect a recession and that conditions in the US banking sector have improved. Stock markets were little changed following the release, but the US Dollar has sold off.
  3. In the Forex market, the US Dollar is falling again in line with its long-term bearish trend. The Australian Dollar is showing the greatest short-term strength while the US Dollar is clearly the weakest currency, putting the AUD/USD currency pair in focus. The long-term bearish trend in the US Dollar remains valid, and trend traders may also be looking for long trades in the EUR/USD and GBP/USD currency pairs, both of which are currently testing long-term highs.
  4. WTI Crude Oil fell hard on recession and demand concerns to reach a new 14-month low below $64 before it bounced back strongly as global risk sentiment improved during the Asian session.
  5. Stock markets have mostly risen during the Asian session.
  6. The ADP non-farm payrolls forecast is predicting a much strong NFP print than had been expected: 296k compared to the forecasted 148k.
  7. US ISM Services PMI data came in almost exactly as expected.
  8. There will be a release of US Unemployment data today.
  9. It will be a public holiday in Japan tomorrow.
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.