ECB Meeting Preview

TAKEAWAYS

•    GBP/USD over 1.39, USD/JPY drops under 108.5 as bond yields dip
•    Bitcoin rises over $56,000 approaches record
•    Gold rises for second day as investors buy into 20% drop
•    Oil gains capped by surprise US inventory build
•    USD/CAD little changed after Bank of Canada leaves policy unchanged 
•    Dow Jones rises 500 points to hit another record close
•    GameStop (GME) stock jumped over $350 before collapsing, halted by the NYSE 
•    Roblox (RBLX) stock jumps in computer game IPO
•    US CPI inflation rose to 1.7% in February from 1.4% in January as expected
•    Biden likely to sign $1.9 trillion stimulus bill on Friday 
•    DAY AHEAD: ECB meeting

BEST CHART
ETH/USD – 4hr Candlesticks
 

Source: GKFX / MT4 (March 10, 2021)

ETH/USD has rallied off trendline support and currently sits at the low of February 19, the day it hit a record high. A new record high could come with a move above $2000 for the first time.

GURU WISDOM

“Make every detail perfect and limit the number of details to perfect.” — Jack Dorsey

MARKETS

*Daily closing price
↗ EUR/USD    1.1927        (+0.24%)
↗ GBP/USD    1.3937        (+0.32%)
↘ USD/JPY    108.39        (-0.07%)
↗ S&P 500    3898.81    (+0.60%)
↗ Hang Seng    28,907.52    (+0.47%)
↗ Gold        1726.60    (+0.66%)
↗ Oil (Brent)    68.19        (+0.99%)
↗ Bitcoin    56,587        (+2.98%)

NEWS

Today the ECB will set monetary policy for the Eurozone. The rise in bond yields prompted a number of ECB board members to suggest the central bank could loosen policy in response, but that seems unlikely today. As usual, any moves in the euro will probably happen around what is said in the press briefing rather than the earlier policy decision.

The forecasts the ECB made in January already look outdated. Rising oil prices and supply shocks from the pandemic are lifting inflation, while many European countries, including Germany have extended lockdowns, weaker Q1 growth.

The ECB will want to talk though on the higher yields without implying it thinks the rise in inflation will be long-lasting. A likely response is to announce it will front-load its PEPP bond-buying this month (buying bonds pushes prices up and yields down). Lower European yields is bearish for the euro but this small manoeuvre may have already priced in with EUR/USD under 1.19.

Elsewhere, Bitcoin and gold have been benefitting from a weaker US dollar in the last two days, the Dow hit a record high, while GameStop shares have been gyrating wildly again and the Bank of Canada left rates on hold in its meeting on Wednesday. 

DAY AHEAD 

*Times in GMT
12:45 - ECB Interest Rate Decision 
13:30 – US Initial Jobless Claims (Mar 5) 
13:30 - ECB Monetary Policy Statement and Press Conference